Blue Cross Chafes At High Ranking On ‘Political’ List
Health Care
by Laurence Darmiento
WellPoint Health Networks Inc. is among the nation’s top health insurers, as measured by its growth in earnings, enrollees and stock price. But its California subsidiary is near the top of another list it would like to be off.
Blue Cross of California ranks among the state’s top for-profit health plans with the lowest medical loss ratios, according to the California Medical Association’s recently released summary of health plan expenditures.
A low loss ratio sounds good, right? Not necessarily, if you’re a doctor or enrollee. The medical loss ratio measures the percentage of each premium dollar spent on medical care after administration and income is subtracted.
Blue Cross paid out 76.4 percent of its revenue for medical care during fiscal year 2000-2001. The only full-service insurer to pay out less was One Health Plan of California, a small plan with just 87,500 enrollees that paid out 66.6 percent. This means that all other plans spent more on medical care. The Blue Cross subsidiary of Thousand Oaks-based WellPoint is California’s second largest health plan with 4.1 million enrollees and notorious for throwing its weight around with health care providers during contract negotiations.
The CMA has published the rankings for nine years now, it claims, as a public service.
“We believe the plans that spend more on health care have healthier consumers,” says Steve Thompson, the association’s chief lobbyist. Not to mention happier doctors.
A Blue Cross spokesman called the report an “exercise in futility” aimed at driving the CMA’s political agenda.
“This has been going on for nine years now and no one can figure out the math. Their numbers are wrong, and they do not take into account the taxes that we pay,” said spokesman Michael Chee.
Chee could not provide numbers for Blue Cross, but said that WellPoint’s entire business had a medical loss ratio closer to 82 percent.
Whatever the case, Blue Cross is not alone among local insurers. Right behind in terms of low medical loss ratios is Molina Healthcare of California, the privately-held, for-profit insurer based in Long Beach. It paid out 77.1 percent of its premium dollar for medical care. PacifiCare Fined
PacifiCare Health Systems Inc. has agreed to an $88 million settlement with the Department of Justice related to allegations that some of its subsidiaries overcharged the federal government for employee health coverage.
The settlement arises from audits the government conducted of health plans that provided employee health coverage from 1990 to 1997. The Santa Ana-based insurer noted the allegations primarily stem from contracts FHP International Corp. held prior to PacifiCare’s acquisition of the company in 1997.
PacifiCare said it had adequate reserves for the settlement, which also involves the release of $15 million in payments to the company that had been held back by the government.
Staff reporter Laurence Darmiento can be reached at (323) 549-5225 ext. 237, or at
[email protected].
