GHI/HIP change could hurt health care
By RICHARD PROPP
Albany Times Union
Tuesday, January 29, 2008
The huge combined health insurance company GHI/HIP wants to convert from nonprofit to for-profit status. Shocked? I doubt it. Empire Blue Cross-Blue Shield set the example in 2002.
So, if this new conversion application is approved, will Capital District Physicians Health Plan and MVP Health Care follow suit? As Oscar Wilde once said, “I can resist everything except temptation.”
The Capital District Alliance for Universal Healthcare believes that health care is a necessity and a social good, and that everyone should have access to high-quality, appropriate and necessary health care. The GHI/HIP “for profit” quest does not appear to further that goal.
The GHI/HIP conversion issue emphasizes many of the ongoing concerns as to whether insurance companies should continue to play such a critical role in determining who gets health care, and how and when.
When a health insurance company seeks for-profit status, it appears it has made a decision to fundamentally change how it operates to acquire a large infusion of cash. This fundamental change will logically result in a shift from a consumer-satisfaction priority to a shareholder-satisfaction focus.
Shareholders need to be kept happy, and the way to keep them happy is to make the company very profitable. How can that possibly benefit the consumers, or would-be consumers, of health insurance products? It certainly won’t bring down the cost of health insurance coverage.
There is no assurance, likewise, that the large infusion of cash generated by a conversion to for-profit status will be used to benefit those who have, or would like to be covered by, a health insurance policy. The history of Empire BCBS is relevant. Its assets were used to increase its CEO’s total compensation of $2.1 million in 2002, the year it got approval to convert to for-profit, to $15.5 million in 2006.
GHI/HIP’s request was first disclosed publicly Dec. 13 and requires careful scrutiny. Why is the Insurance Department review timeline so short? Hearings are scheduled today in New York City and Thursday in Albany. There is no justifiable reason to act in haste on this important issue. The Empire BCBS approval process took five years.
The following questions should be asked at the hearings so that an informed and thoughtful decision can be made:
- What are the consequences of the company going from an ethic of subscriber value to one of shareholder value?
- Will the need to assure adequate profits mean premiums will increase and that more care will be denied or delayed?
- 2.7 million people lack health insurance in New York. What effect will conversion have on that number?
- How much of the new revenues generated by going for-profit will finance GHI/HIP lobbyists, and will they work for consumers or shareholders?
- In four other states, Kansas, Maryland, Washington and North Carolina, requests for for-profit status were declined after serious scrutiny by insurance regulators, including the hiring of independent outside experts who studied the impact on the insurance market and access to health care, marketplace competition and industry concentration. Are there no other management alternatives to for-profit? Are relevant studies being carried out by this administration?
- GHI/HIP has $900 million in reserves and just bought Connecticare for $350 million. Why does GHI/HIP need for-profit status to secure its future?
Dr. Arnold Relman, a physician, teacher and thoughtful national medical leader, has written that the key to saving America’s health care lies in having a nonprofit health care system that includes everyone. It seems to us that approving GHI/HIP’s conversion is inconsistent with that idea, will only benefit the shareholders and executives, and will result in worse health care in New York state.
Richard Propp, M.D., is chair of the Capital District Alliance For Universal Healthcare Inc.