BCBSD vs. Delaware Kids

Yesterday’s NJ reported on the issues to be discussed in a hearing held last night in front of the Insurance Commissioner on a rate application that would attempt to charge Delaware kids more for subsidized insurance than they charge (via Highmark) in Pennsylvania. At the heart of the issue is this:

State lawmakers passed legislation last summer calling on Highmark and Blue Cross to provide affordable coverage for Delaware families whose incomes are too high to quality for the state’s children’s health insurance program, or CHIP. Delawareans with incomes up to 200 percent of the poverty level — $44,700 for a family of four — qualify for the publicly funded CHIP.

Highmark provides this kind of coverage in PA to families with children who don’t qualify for that state’s CHIP. The Highmark merger documents appear to commit to providing the kind of program for Delaware families that the GA wanted to make sure BCBSD would offer. Now, however, BCBSD is balking at this, trying to claim that there is no requirement that they subsidize the program. The rate filing that Highmark has made asks the IC to approve a non-subsidized (and much higher) premium for for the families that would qualify for this program.

As part of last night’s hearing, the co-author and sponsor of Delaware’s legislation requiring this program from BCBSD, Representative Terry Schooley, provided testimony intended to clarify the intent of the GA’s legislation. Here is the heart of it, but you can see the entire text of her testimony here:

This rate filing is the result of a bill that I co-wrote and sponsored. I know that there has been some debate over what the authors of the bill intended for it to do. So as one of those authors – both of the original bill, and of the amendment – let me take this opportunity to clear up any misunderstanding. The original bill was intended to require Highmark and Blue Cross to offer a CHIP buy-in program in Delaware with exactly the same premiums that Highmark charged to Pennsylvania children. The bill passed the Senate unanimously, unamended, without any objection from Blue Cross or Highmark. When the bill came up in committee in the House of Representatives, Blue Cross complained that the legislation did not allow for the fact that Delaware’s underlying medical costs might be higher than those faced by Highmark in Pennsylvania. So the bill was amended to give you, the Insurance Commissioner, the discretion to set the rates by looking both at the rates that were charged by Highmark in Pennsylvania, and Delaware medical costs.

The rates that Blue Cross is asking you to approve are completely contrary to the intent of the bill that I authored. The amendment that I wrote was intended to allow you the discretion to have Blue Cross’s CHIP buy-in rates deviate from the Pennsylvania rates if Blue Cross could show that medical costs in Delaware were higher. The amendment was never intended to allow Blue Cross to charge the neediest eligible families – those just a few dollars over the CHIP cut-off – four times what they are charged in Pennsylvania. The lower rates that are charged in Pennsylvania for those families between 200% and 300% of poverty were explicitly discussed when the legislation was discussed – there was never any doubt in the minds of my colleagues in the House which rates we were talking about when we said the rates should be comparable to Pennsylvania.

Blue Cross claims that the legislation does not require it to subsidize this children’s health insurance plan, and that you therefore should not require it to do so. But that is not what Blue Cross said to your hearing officer for this transaction. On September 22nd, Blue Cross and Highmark filed a memorandum with your hearing officer where they told the hearing officer that one of the reasons this merger should be permitted was because it would permit Blue Cross to offer a subsidized CHIP buy-in program. The word “subsidized” was their word, not mine. Now that they have received a favorable recommendation from the hearing officer, they would like to take back what they said. But when they wrote to your hearing officer in September, they knew that the legislation required them to financially support this program.

Moreover, Highmark subsidizes its Pennsylvania CHIP program to the tune of almost $10 million per year. Again, the intent of this legislation was that Delaware children would be treated the same as Pennsylvania children, if the same company was going to oversee Blue Cross in both states. Zero dollars is not the same as $10 million.

Rep. Schooley’s testimony seems pretty clear as to the intent of the legislature, and kudos to her for making sure she got heard. The bottom line here is that BCBSD/Highmark is trying to weasel out of a commitment required by the GA to cover these families in the way that Highmark covers families in PA. It looks to me that they agreed to this when their merger was still not yet approved and now that it looks like a done deal they want to back out of it.

It is time for the Insurance Commissioner to not only deliver on what Delaware’s kids really need, but on what the legislature clearly wanted from BCBSD. Call her at (302) 674-7305 or send her an email at karen.stewart@state.de.us to ask her to stand up for Delaware’s kids and ask BCBSD to deliver the program the legislature required.