BlueCross, Cigna Back To Slow Health Care Baucus Legislation

U.S. Senate Finance Committee Chairman Max Baucus' decision to eliminate a "public option" from a health care overhaul doesn't mean insurers such as Chattanooga-based BlueCross BlueShield of Tennessee now are clamoring to get aboard the bill.

Officials with BlueCross and Cigna, which also has a large presence in Chattanooga, said they still have a variety of other concerns, such as new taxes proposed in the Montana Democrat's plan.

"As we've stated previously, BlueCross strongly supports health care reform that will expand coverage to everyone, improve quality and rein in costs," BlueCross public affairs manager Scott Wilson said. "The Baucus bill achieves many of these goals."

But Mr. Wilson said that, while "we strongly support the goal of making coverage affordable," BlueCross officials nonetheless "are greatly concerned that new taxes and fees aimed at insurers and others in the health care industry would severely undermine the reforms that the chairman's mark aims to achieve."

The Senate Finance Committee on Tuesday took up Sen. Baucus' proposal to extend health insurance coverage to millions of uninsured Americans. The plan, which would cost $856 billion over 10 years, drops a so-called "public" or "government" insurance plan that dominated public discussions during Congress' August recess.

Proponents say the public option, still intact in several House bills and another Senate measure, is necessary to provide competition for insurers in order to lower premium costs and provide choice in areas where little competition now exists. Critics, including insurance companies, say it would lead to unfair competition.

But insurers have other concerns besides the public option.

Bill Hoagland, Cigna's vice president for public policy and government affairs, said Sen. Baucus' proposal, among other things, "imposes a surtax on insurance carriers long before the reform takes place."

The annual fee on health insurance providers was expected to generate $40.5 billion over a 10-year period. But changes Sen. Baucus made this week to draw more Democratic support increase the fee to $45.3 billion, according to Congress' Joint Committee on Taxation. The money would go to reduce the legislation's costs to middle-income families and to scale back another tax on high-cost insurance plans.

"We're against it," Cigna spokesman Chris Curran said of the fee, "and the reason we're against, it unfortunately is going to end up increasing costs because, as with any tax on businesses, that's going to get passed on to consumers. We don't have much room to absorb anything additional."

Tony Garr, executive director of the Tennessee Health Care campaign, believes reforms need to go further than the Baucus bill. He had little patience with insurers' concerns.

"The insurance industry has had 50 years to clean up their act, and they have not done that," he said. "So the government has got to come in there and then sort of what they have to do. They haven't treated people fairly. They have rescinded people's policies."

Another provision in the Baucus bill dealing with an excise tax on high-end "Cadillac" health plans also has changed. Bowing to pressure from Democrats, Sen. Baucus earlier this week announced he would cut back the tax so it will grow more slowly. He originally proposed charging an excise tax of 35 percent on such plans, tying it to the consumer price index. Changes now raise the tax to 40 percent but use an index of the CPI plus one percent, according to the tax committee.

In another concession, firefighters and others in high-risk professions as well as retirees over 55 would be able to have the more expensive plans before the excise tax takes effect.

BlueCross says the proposed tax on high-end insurance policies ultimately will be passed on to customers, and Mr. Wilson said the insurer opposes it.

Emphasizing that initial details of the Baucus proposal remain "sketchy" and the legislation has a long way to go, BlueCross' Mr. Wilson said about 2 percent of the company's group-insured members "are in a plan that would qualify as a high-cost plan under the current proposal." At least that percentage would be affected in plans BlueCross administers for companies that are self insured.

Cigna's Mr. Curran said "the impact of that is going to be small on us."

But Cigna has other concerns, Mr. Hoagland said. For example, competition across state borders could pose problems, he said. And he noted Sen. Baucus' concepts have yet to be translated into actual statutory language. Moreover, the bill has yet to attract any GOP support.

"I really congratulate (Sen.) Baucus in trying to make this bipartisan," Mr. Hoagland said, "but it's not there yet."