A few hours after the U.S. Supreme Court issued its decision on the Patient Protection and Affordable Care Act, Brad Wilson, president and CEO of BlueCross BlueShield of North Carolina, the state's leading insurer with 3.6 million customers, spoke by phone with HealthLeaders Media Senior Technology Editor Scott Mace.
HealthLeaders Media: A number of Americans will choose to pay a penalty to the IRS rather than purchase health insurance. Are you concerned about that?
Brad Wilson, BlueCross BlueShield of North Carolina: Let me give you just a little context. After I became CEO two and a half years ago, I spent a lot of time traveling around, right in the aftermath of the passage of the bill, and a long time before lawsuits were filed and there was a lot of focus on the Supreme Court ruling. The point that you're making has been around since that time. In North Carolina, the employers that I'm talking to, now that we have clarity and certainty as to what the law is, many, many employers will in fact do the math and will make a business decision about what is the most economically effective thing that they should do, as well as how that relates to the retention and the recruitment of the type of workforce that they need.
What I have heard is many, many employers will continue to value health insurance as a part of their benefit offering, because they believe that will make them more competitive, whatever their marketplace is, because it is a recruitment and retention tool, as well as a tool by which their workforce can remain and achieve greater things. There are however a number of employers—they seem to be more of the smaller employers, not just those under 50 who are exempt from the law—but smaller employers that are going to be driven more by the economic calculus than by the benefit calculus. Now, is that a concern? I don't believe the number is going to be great enough that it would create a market disparity, if you will, such that as the state's largest health insurer we would think it would cause the market to dramatically tilt.
Brad Wilson, BlueCross BlueShield of North Carolina: But one thing is clear. Regardless of the decisions of the employers, we are already moving toward a more individual, consumer-oriented marketplace. Whether the consumer is insured through their employer, or whether their employer discontinues the coverage and they will seek individual coverage through the exchange or through their own direct purchase opportunity, that's where we have been focused for the last two years, and that's where we're going to continue to focus, to be ready to meet the needs of whatever that market demographic may ultimately be. So I wouldn't say I was concerned. I would say that we will continue to be vigilant to try to determine what the market shifts are, and be prepared to offer the products and services that our customers, be they employers or individuals, need and want.
HealthLeaders Media: What is your reaction to the stock market sharp rise today in provider stock prices and drop in payer stock prices? … It seems the market is saying, good times for providers, challenging times for payers.
Wilson: One day does not a trend make, but it is in fact a data point. I would interpret that relative to the payer side, and again, recognizing that we are not for profit so we're not affected by that, but we do have investments. The market is expressing a concern that actually your first question raised. To what extent will individuals and employers comply with the law or choose to participate in the market. In other words, not pay the penalty, and that's a question mark. None of us know. It's still a projection. I'll digress just a minute and say that here in North Carolina, we believe that January 1, 2014, will introduce 2 million new people in North Carolina to healthcare coverage of some type. Approximately 850,000 being new Medicaid-eligibles, assuming that North Carolina chooses to comply with the law with the nuance of the court today.
Brad Wilson, BlueCross BlueShield of North Carolina: So that says there's 1.2 million commercial customers that will be eligible for a federal subsidy. So I would say that the market is creating a question mark [about] how many of those will in fact choose to purchase, and a question mark about how will an insurer navigate through the guarantee issue, the age ban, the prohibition on medical underwriting, and how will that translate into profitability or not—that would be my unsophisticated interpretation of what the stock market did.
And on the provider side, I find that curious, because the focus going forward is going to continue to be on higher quality and lower cost, and when I say lower cost, I'm not just talking about health insurance premiums. I'm talking about healthcare costs that underpin and are reflected in the health insurance premium. There's going to continue to be cost pressure on lowering that side of the equation, so that premiums do not increase at the rate that we've seen them increase for the last 20 years. So we'll see. We'll see what the stock market does tomorrow.
HealthLeaders Media: About your own investments in bringing BCBSNC into your next phase with presumably lots more customers, I would guess your plans remain unchanged by this morning's ruling and may in fact be intensified a little bit.
Wilson: I don't think anything will change. To the extent that we can intensify our efforts beyond what we're already doing, we will. We're going to stay focused on the decisions that we've already made. We're focused on innovation. We're focused on new and creative collaborations with providers across the state. We already have a track record on that. That continues, and I think it'll do nothing but expand and accelerate our appetite and the need for that to be done. I want to say that that's a reflection of what we're seeing in the provider community: they are reaching out to us, we are reaching out to them. I've been at BlueCross for 16 years and in this job two and a half, and I have never seen such a high level of cooperative and creative spirit that exists with all of the principal players in the healthcare marketplace. So we're going to continue to be focused on those kinds of efforts to the end, to bring products and services to our customers that they need and want, with the goal being higher quality, lower cost.
Scott Mace is the former senior technology editor for HealthLeaders Media. He is now the senior editor, custom content at H3.Group.