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Earnings Up For Large Mass. Health Plans

Blue Cross Blue Shield Chief Andrew Dreyfus

WBUR’s Martha Bebinger reports:

Earnings are up for all four of the state’s largest health insurance companies.

The largest — Blue Cross Blue Shield of Massachusetts — reports income for the first time in three years.

After losing money in 2009 and 2010, Blue Cross president Andrew Dreyfus says operating income for last year totaled $43 million. “I think it reflects the fact the company is healthy and doing well,” he says, “although the operating margin is very narrow.”

Tufts Health Plan, Fallon Community Health Plan, and Harvard Pilgrim Health Care are also reporting significant earnings increases.

The Boston Globe’s Rob Weisman reports on the latest health plan financials here, including a pointed comment from a consumer advocate about continually rising premiums.

“Premiums are still increasing, and they’re already too high,’’ said Deirdre Cummings, legislative director for the Massachusetts Public Interest Research Group. “This is the same dance insurers have been doing for some time, and this is what consumers are frustrated by. Insurers are reaping the benefits that should be going to consumers.’’

Trend: You Choose More Costly Care, You Pay More Out Of Pocket

At the bottom: Practical tips

First, Eric Schultz, chief of Harvard Pilgrim Health Plan, the #1-ranked plan in the nation, told me with utter certainty: This is the wave of the future. Soon it will be as common as having a 401K plan.

That got my attention. Then Attorney General Martha Coakley put it at the top of her list of what should be done to cut Massachusetts health care costs. And the state’s Group Insurance Commissioner, Dolores Mitchell, declared at a hearing, “I think it’s an idea whose time has now finally come.”

What’s the idea? Please pay attention, because there will be a test on this topic — the next time you’re choosing health insurance.

The concept is called “tiered” health insurance. It is a major national and statewide trend. It has both major upsides and major downsides. And it goes roughly like this:

One way you can lower your painfully high health insurance premiums is to sign up for a plan that limits the doctors and hospitals you can use to cheaper ones. That’s called a “limited network.” But it can be scary to rule out any chance of going to a fancier, more expensive hospital or doctor.

So now, increasingly, you can opt for a cheaper-premium plan that lets you sign up for a lower-cost “tier,” or level of health care, but also gives you an out: If you ever want to get care that’s ranked by your health insurer in a more expensive tier, you can. You’ll just have to pay more out of pocket in a co-pay or deductible — maybe a lot more.

“What tiering does is it lets the consumer, the member, make a choice every time they have a medical need, and that makes people more comfortable,” said Jim Roosevelt, chief of Tufts Health Plan, which is ranked a close #2 in the nation and has about one-third of its members in tiered plans. Health insurance, after all, “is supposed to relieve the fear of the unknown,” he said.

Everybody’s Doing It

Blue Cross Blue Shield of Massachusetts made a big splash this winter when it introduced its “Hospital Choice Cost Share” plan, which would charge members up to $1,000 in co-pays if they choose (in non-emergency situations) to go to the 15 hospitals it ranks as high-cost.

It sparked some controversy when it was announced. To many — including me — it is daunting to contemplate giving up free access to prestigious but expensive hospitals like Massachusetts General and Brigham and Women’s. But Blue Cross chief Andrew Dreyfus now says it’s one of the fastest-growing products in the insurer’s history. Continue reading