By Stephen T. Swift
BlueCross BlueShield of Western New York’s reluctant decision, announced last week, that it must stop offering three New York State Medicaid programs in Erie, Cattaraugus, Chautauqua, Orleans, Wyoming and Allegany counties reflects an unfortunate situation for our Medicaid members.
Although the debate around the impacts of the Affordable Care Act continues, this decision was not based on issues coming from the federal level. BlueCross BlueShield is similar to other major health insurance companies in upstate New York that exited these plans. We looked at the same numbers, held out as long as possible for additional reimbursement from New York State and, ultimately, had to make this difficult decision.
We continued to suffer losses of more than $40 million in the last three years from these programs. It is not fair to ask employers, families and individual members to, in effect, subsidize these losses with their premiums.
BlueCross BlueShield has a long history in Western New York – more than 75 years – and for more than 20 years has actively supported these programs and members under the umbrella of Medicaid Managed Care. However, the revenue we receive from the state does not cover the claims we pay for these 53,000 members.
The reality is clear-cut. If a service to a Medicaid member costs $100, but the state pays only $80, the insurer either loses $20 each time, other non-Medicaid members’ premiums artificially rise to pay the $20 shortage, or our mandated reserves are explicitly reduced to cover the difference. None of these scenarios is sustainable. This situation is no different from what every business or household faces. The money that comes in must equal the amount that goes out; no home or business can stay financially solvent if those two are out of balance.
While the state recently increased the amount it pays for these programs, the reimbursement still falls short. Ultimately, the premium dollars received are inadequate to cover the cost of care for these members.
Several attempts were made to minimize Medicaid losses, but the reimbursement levels remain inadequate.
No one is “losing” health insurance as a result of this decision. There are other quality insurance plans that administer these programs in the counties noted. Our highest priority is to ensure an orderly transition for these affected members to participating insurance carriers with an emphasis on no disruption in services.
Decisions like these are never easy, but we were faced with a situation that left us no choice but to proceed with a responsible exit from these programs and one we could no longer postpone.
Stephen T. Swift is executive vice president and chief financial officer at BlueCross BlueShield of Western New York.