CEO of BCBSNC says containing health care costs will take time

Blue Cross Blue Shield of North Carolina President and CEO Brad Wilson is optimistic that the Affordable Care Act and changes within the health care and insurance industries will be able to address the country's swelling health care costs.

But Wilson told Triad health insurance agents Tuesday that what keeps him up nights is not whether change is on the way, but whether it's coming fast enough.

"I believe that it (the Affordable Care Act) is going to stay on the books, and I believe it is going to change over time," Wilson told members of the Triad Association of Health Underwriters during its monthly meeting at Starmount Forest Country Club in Greensboro. "I truly believe we are at the beginning of a long journey."

Over the long-term, the so-called "fee-for-service" model that has dominated health care for decades is changing, Wilson said. But the short-term impact of the Affordable Care Act, which expands insurance coverage to millions beginning in 2014, will be to drive premiums up for individuals and small groups as the health insurance industry takes on new taxes and fees and health care spending increases.

Blue Cross Blue Shield, the state's largest health insurer with more than 3.7 million members, anticipates its annual tax bill will nearly double to about $80 million beginning in 2014 under the Affordable Care Act. That revenue in part will help subsidize the extension of coverage to hundreds of thousands in the state not currently insured who will become eligible for premium subsidies in 2014.

Wilson said those subsidies, meant to help make coverage more affordable for individuals and small groups, won't likely cover the anticipated increase in premiums in the short term. When asked by a broker Tuesday if estimates that say some small groups could see premiums rise by as much as 50 percent, Wilson said he expects increases would vary, but such a large increase wouldn't surprise him.

"(Subsidies) will not reduce costs any more than the Pell Grant program has reduced the cost of college tuition," Wilson said, referring to the higher education grant program for lower-income students. "Even with the subsidies, ... many are going to find that the amount of (premium) increase is greater than the amount of subsidies."

But Wilson's message wasn't all gloomy. He pointed toward investments BCBSNC is making in the delivery of care, and the collaborations it has undertaken with providers to change from the "fee-for-service" model that values quantity to one that focuses on quality and efficiency. That includes more bundled payments to providers that cap payments for an episode of care.

Wilson pointed to his company's partnership with UNC Health Care in Carolina Advanced Health, a new medical practice in Chapel Hill built around an accountable care organization model. Such a model rewards providers for preventive care and improving outcomes while allowing them to share in cost savings realized through such efforts.

"It is truly a patient-centered experience," Wilson said of Carolina Advanced Health, which launched in December 2011.

Wilson, who started with Blue Cross Blue Shield as general counsel, was tapped to head the company just six weeks before the passage of the Affordable Care Act in March 2010, which he said changed all that he had known about the health insurance industry.

But despite the coming cost increases in the short term, Wilson still said it's a "wonderful time" to be involved in health care and health insurance, saying that the industries are at the beginning of a "revolutionary" change.

Wilson's visit to Greensboro comes shortly after Blue Cross Blue Shield of North Carolina released its annual earnings report, which saw the not-for-profit entity generate $57.7 million in income on $5.7 billion in revenues, while giving top executives substantial increases in compensation through bonuses based on performance, an expansion of responsibilities and benchmarking with peer companies, according to the company.

The insurer reported that it spent 87 cents of each premium dollar on medical care in 2012, up from 85 cents in 2011, and paid $92.1 million in federal, state and local taxes.

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