Blue Shield of California chief executive says they're committed to state exchange, criticizes Trump

The chief executive of Blue Shield of California, the largest insurer on the state-run marketplace, says he's committed to selling coverage there even as Republicans pursue a repeal of the federal health law.

In an interview this week with California Healthline, Paul Markovich also criticized President-elect Donald Trump's support for the sale of insurance plans across state lines in order to boost competition and consumer choice.

"It will push health plans to find the regulatory body or state with the fewest number of regulations," Markovich said. "It's a race to the lowest common denominator and least rich benefits. That is what we want to avoid, and I don't think it will do much to increase competition. I find it perplexing."

Blue Shield covers nearly 30 percent of enrollees in the Covered California exchange market. Industry giants Anthem Inc. and Kaiser Permanente are close behind.

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Nationally, as a Republican Congress looks to dismantle key parts of the Affordable Care Act, some policymakers and consumer advocates are concerned that an increasing number of insurers will leave the government-run exchanges.

Markovich said he expects the San Francisco-based insurer to lose money on its exchange business this year after posting profits in 2014 and 2015. But he said the insurer isn't looking to pull out.

"There are always risks and concerns moving from one policy framework to another, but I think an effective transition is workable. We wouldn't be running for the hills," Markovich said. "We intend to keep offering individual coverage and keep trying to make it work under whatever regulatory or legislative umbrella we are under."

For 2017, Blue Shield is raising its exchange rates by nearly 20 percent, on average.

At a board meeting Thursday, Covered California officials are expected to share details on the current open enrollment and hear from experts about the exchange's long-term future.

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California has the largest state-run marketplace, with about 1.4 million enrollees. It has served 2.5 million residents since enrollment began in 2014. Nearly 90 percent of exchange customers receive federal premium subsidies.

Kaiser Permanente's chief executive, Bernard Tyson, expressed optimism that key elements of the health law, such as premium assistance and Medicaid expansion, may be salvaged after Trump and Republican lawmakers look at their alternatives for coverage expansion.

"Clearly, President-elect Trump and his administration are not up close to what the Affordable Care Act really is and what it really means," Tyson said in an interview. "I believe when they get under the hood of the ACA, I think we may start to see and hear different conversations."

[Also: Blue Cross Blue Shield of Nebraska loses $140 million in Obamacare, will exit market]

Tyson warned about giving up on the historic gains in insurance coverage that have occurred under the health law. If people lose coverage and the rate of the uninsured increases, hospitals and physicians face the prospect of more uncompensated care and declining health for many patients.

Kaiser Permanente is somewhat unique as both a major insurer and a health system running hospitals and physician offices.

"I don't get to walk away from this if government is not providing coverage to them anymore," Tyson said. "They are still part of our community and we have to figure it out."

Some health care groups have endorsed Trump's proposal for more cross-border insurance plans, saying it would curb the insurers' market power in some states. On his presidential transition website, Trump touted it as a way to "maximize choice and create a dynamic market for health insurance."

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Under the Affordable Care Act, companies are already allowed to sell across state lines if there's an agreement among the states involved. The health plans, however, must still meet the minimum coverage requirements of the federal law. No states have pursued that option, and health insurers haven't shown much interest.

But some Republicans are looking to scrap those minimum federal requirements and hand more flexibility to the states.

California's health insurance market for individuals and employers is more competitive than many states, with major players including HMO giant Kaiser Permanente and two Blue Cross Blue Shield carriers.

Consumer advocates in California have slammed the idea of selling insurance across state lines and echoed the criticism from Blue Shield. They said out-of-state insurers would be able to skirt the state's consumer protections on access to timely care, adequacy of provider networks and the right to appeal an insurer's denial of care.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

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