It has been widely reported that various “sweeteners” are tucked away in the Manager’s Amendment to the Senate health care bill (H.R. 3950). Senate Majority Leader Harry Reid (D-NV) worked out provisions designed to secure the votes of Senators Ben Nelson (D-NE) and Carl Levin (D-MI) by exempting the biggest insurers in their states from the new health insurance premium taxes embodied in the bill.
Sure enough, the Manager’s Amendment adds under Section 9010(c)(2) a new subsection (C) tailored to exempt Blue Cross Blue Shield of Michigan and a new subsection (E) tailored to exempt Blue Cross Blue Shield of Nebraska from paying the new health insurance premium taxes.
Now, those Senators are reportedly pleased with themselves for doing such a fine job of looking out for the folks back home. The only problem is that they shielded just some of their constituents — which should surprise many of their other constituents.
The Cornhuskers. Once again, let’s go to the numbers — starting first in Nebraska, and then moving on to Michigan.
Blue Cross Blue Shield of Nebraska dominates that state’s individual insurance market with over 38,000 covered lives. However, last year almost 10,000 Nebraskans got individual coverage from one of 15 other insurers. If they want to keep that coverage in the future, they’ll have to pay the new premium taxes.
Similarly, last year BC&BS of Nebraska covered 36.000 Nebraska federal workers, retirees and their dependents through FEHBP, while another 318 got their FEHBP coverage from Aetna, Coventry or United. Sure, that’s only a tiny minority. The new premium taxes ought to teach them to stop making such silly choices.
Now what about those Nebraska small businesses that buy group coverage for their workers and their families? Well, last year 194,000 Nebraskans were enrolled in group coverage offered by BC&BS of Nebraska — but another 171,000 got group coverage from one of 16 other insurers offering plans in the state. Hmmm. Looks like those constituents didn’t get cut in on the deal.
Then there are the Nebraska retirees who opted for a Medicare Advantage plan. Last year only 29 percent of them picked BC&BS of Nebraska, while 47 percent picked United, 15 percent picked Coventry and the rest chose one of two other plans. So, some of those Nebraska grandparents are going to need to pony-up the taxes if they want to keep their current coverage.
Oh, and what about the over 31,000 Nebraskans with Delta Dental coverage? They’ll get nicked a bit for the new premium tax as well — but the good news is that BC&BS of Nebraska also offers group dental coverage.
Michigan. Now on to Michigan, where the story is pretty much the same, it’s just that the numbers are bigger since the population of Michigan is five-and-a-half times that of Nebraska.
Blue Cross Blue Shield of Michigan has an 88% market share in that state’s individual market (just under 200,000 individuals), but another 27,000 have individual coverage from one of 25 other insurers — and they’re left out of the deal.
When it comes to employer group coverage purchased by Michigan small businesses, 1.57 million people were covered last year by a BC&BS of Michigan plan, but another 1.27 million got their coverage from one of 23 other insurers offering group coverage in the state — no deal for them either.
Among Federal workers, retirees and their dependents living in Michigan, 79 percent of them picked a BC&BS of Michigan plan for their FEHBP coverage last year, but another 17 percent went with coverage offered by the Henry Ford Health System and the rest opted for coverage from one of six other insurers participating in FEHBP in Michigan. If they keep up that foolish behavior it’s going to start costing them more in higher taxes.
How about those Michigan retirees who went with a Medicare Advantage plan? Well, the good news is that 71 percent of them are in a BC&BS of Michigan plan — so their coverage will remain free of the new premium taxes. As for other 29 percent who picked a Medicare Advantage plan offered by one of 11 other insurers — they’ll just have to cough up more if they want to keep their current coverage once the premium tax hits.
Oh, yes. Then there are limited benefit policies — principally dental care and vision care plans. BC&BS of Michigan has 76,000 customers for that kind of coverage, but that represents less than 3.5 percent of the Michigan market for such plans. In contrast, last year 2.17 million Michigan residents had dental, vision or other supplemental coverage from 19 other insurers including: Cooperative Optical Services (166,000 enrollees), Heritage Vision Plans (228,000 enrollees), and Renaissance Health Services (vision or dental coverage for 1.34 million Michigan residents). Of course, such limited benefit plans don’t cost anywhere near what full major medical plans cost, so those voters probably won’t even notice that they are paying a bit more to cover the new Senate premium tax. Heck, they’ll probably just blame their insurer for raising their rates.
All these figures, and more, come from annual reports that insurers are required to file with state insurance departments. So Senators could have easily gotten this data from their own state governments before rushing to vote for more taxes on their constituents.
It’s also worth noting that this data shows that both Nebraska and Michigan have plenty of health insurance competition and choice. So, how exactly does getting a tax exemption for the biggest insurer in each of those states — but not the others — make the Nebraska and Michigan health insurance markets more competitive?
Inquiring minds wish to know.