Two of the nation's leading forces in health insurance -- UnitedHealthcare and the Blue Cross and Blue Shield Association -- will face off Thursday before a congressional subcommittee in a battle for control of the $47 billion program that covers 8 million federal employees, retirees and their families.
UnitedHealthcare said it wants Congress to change the language of a 1959 law that it says gives the nonprofit Blue Cross and Blue Shield plans too much power to dominate the Federal Employees Health Benefits Program (FEHB). The effort has the backing of Aetna and Humana, also major for-profit insurers. The Blues now cover almost two-thirds of the people in the program. UnitedHealthcare says it's fighting for the change so it and other insurers can more easily compete for the business.
The Obama administration, in its fiscal 2014 budget proposal released Wednesday, said it favors allowing more plans to compete to cover federal employees. The Blues are fighting the change, saying there is already sufficient competition with 230 plans participating in the program.
"We are all for competition and welcome more competitors, but it must be on a level playing field," said Alissa Fox, senior vice president of the Blue Cross and Blue Shield Association, a trade group representing Blues plans across the country.
She said allowing regional plans to participate in the program would undercut national blues plans because regional players would serve only low-cost markets. She said the Blues would have to offer the same, which would lead to premium increases in many markets.
The hearing is being held by the House Oversight and Government Reform subcommittee led by Rep. Blake Farenthold, R-Texas. UnitedHealthcare and the BCBS Association are the only two insurance groups testifying. An official from the American Federation of Government Employees, one of the largest federal labor unions, is also scheduled to testify.
A June 2012 Health Affairs article said that in areas of the country with multiple health plans competing, premiums were more than 10 percent lower compared to areas of low competition.
UnitedHealthcare and the Obama administration are expected to argue that opening the system to more regional health plans would spark greater competition, which would hold down premiums. Others say the program already offers federal employees enough choices and that it has done well at controlling costs. Fox said Blue Cross Blue Shield plans have kept premium increases on their most popular FEHB plans under 2 percent for the past two years, well under the national average.
The Blues offer two national preferred provider or PPO options to FEHB members, which cover 62 percent of enrollees. A PPO plan gives members an economic incentive to use certain providers but does not block patients from getting care outside of its networks.
The next largest plan by enrollment is the Government Employees Health Association (GEHA), which is also a national PPO plan. The GEHA plan covers approximately 7 percent of all FEHB members.
This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.