Blue Cross and Blue Shield Companies to Launch Retiree Health Insurance Exchange

BlueCross BlueShield Association, April 24, 2015

Blue Cross and Blue Shield (BCBS) companies will launch a health insurance exchange this summer that will support employers’ efforts to help retirees transition from group health benefits to individual Medicare coverage that starts Jan. 1, 2016.

BCBS Marketplace will offer Blue Cross and Blue Shield Medicare Supplement Insurance (Medigap), Medicare Advantage Plans and Medicare Part D prescription drug coverage in more than 45 states and Washington, D.C.…

The BlueCross BlueShield Association is a national federation of 37 independent, community-based and locally-operated Blue Cross and Blue Shield companies that collectively provide health care coverage for nearly 105 million members – one-in-three Americans. They now intend to establish a health insurance exchange that will promote transition of employer-sponsored plans to Blue Cross and Blue Shield Medicare Supplement Insurance (Medigap), Medicare Advantage Plans and Medicare Part D prescription drug coverage.

Some employers are already transitioning to private insurance exchanges (similar to but separate from ACA exchanges), converting their employer-sponsored plans into defined contribution plans. As employees retire and become eligible for Medicare coverage, the BlueCross BlueShield retiree health insurance exchange will simplify the transition from employer sponsored group plans to individual Medicare coverage, but doing it with private plans. Since employer-sponsored plans are the largest sector of health care coverage, this transition could cause a massive influx of plans into the private Medicare insurance market.

The retiree exchanges will offer Medigap plans, Medicare Advantage plans and Part D drug plans.

Medicare Advantage plans (Part C plans) are able to offer greater benefits with minimal or no premiums, and thus they continue to grow in popularity. Enrollees are not concerned that taxpayers are providing greater subsidies for these plans, even if CMS is using accounting gimmicks to do so. Plan beneficiaries will always place their own interests above the collective interests of us all.

As Medicare Advantage enrollment is increasing, enrollment in Medigap plans is declining. The Medigap premiums are relatively high considering the limited benefits. The decline in Medigap enrollment may accelerate even more once the Medigap plans are prohibited from covering Part B deductibles (a provision of the recently enacted Medicare SGR fix).

Medicare Advantage plans frequently include the Medicare Part D drug benefits, obviating the need to purchase a separate Part D plan as Medigap enrollees would have to do if they wanted drug coverage.

You can see where this is headed. Employers will be enabling BlueCross BlueShield to enroll retirees into the private BlueCross BlueShield Medicare plans wherein the Medicare Advantage plans (Part C) will experience preferential enrollment. Thus enrollment in the traditional Medicare program (Part A and Part B) will decline substantially. Once the private Medicare Advantage plans become the dominant player (and they are well on their way already), the traditional Medicare program will lose political support and will be converted to a chronically underfunded welfare program, if it survives at all.

Although the establishment of the BlueCross BlueShield Medicare exchanges will likely be lost in the fog of all of the innovative changes taking place under the Affordable Care Act, they are coming. They will be here in only eight months. As the political and policy communities continue to fiddle with other aspects of implementing the Affordable Care Act, the privatization of Medicare will have taken place right before our eyes, and they do not even need Paul Ryan’s premium support vouchers to do it. (In fact, the Republicans just struck premium support from the budget proposal they agreed to this week.)

Just try to stop this one.