Hoping to get a jump on competitors and on government health reformers, Blue Shield of California announced Monday that it will drop all health exclusions from its coverage plans for individual enrollees and their families, without raising rates.
Effective Jan. 1, the San Franciso-based insurer will no longer exclude benefits for specific medical problems or impose waiting periods for pre-existing conditions. But it will still refuse coverage to some applicants with health problems.
About 70,000 of Blue Shield's 500,000 individual customers--with ailments ranging from asthma to heart disease--will see their coverage improve immediately, as exclusions are eliminated for those who signed on before Jan. 1, 1993.
The move by the state's third-largest health insurer is the latest in a series of recent actions by insurance companies to leapfrog each other's efforts to extend and improve coverage of small groups and individuals--before lawmakers force them to do so.
The Blue Shield action goes beyond state health reforms that take effect Jan. 1, requiring carriers to limit such "waivers" and waiting periods to 12 months for individuals and groups as small as two members.
Meanwhile, rival Blue Cross of California today will announce significant price cuts in its managed-care plans for small groups, those with five to 50 members. Blue Cross--California's market leader in individual health coverage, with 740,000 enrollees--had earlier cut waiting periods for pre-existing conditions in its individual plans to six months, half the maximum legal limit.
"I see major strides to beat Hillary Clinton to the punch," Richard Kagan, a Century City insurance broker, said Monday, referring to the First Lady's stewardship of federal health reform proposals.
Insurers, fearing that their role will be diminished or even eliminated by federal reforms, are trying to prove that competition and voluntary initiatives can cure many of the ills that the government is proposing to address by law.
"Rather than waiting for health-care reform to come down on us, we want to be innovative and serve as a model for these changes," John Zervakos, Blue Shield vice president, said Monday.
Because Blue Shield will continue to reject some applicants for health reasons, the move it announced Monday stops well short of guaranteed coverage for all applicants--a main goal of the Clinton reform proposals.
Zervakos acknowledged that when the company stops writing exclusions into its policies, some applicants who would have qualified for limited coverage will be unable to get Blue Shield coverage at all. He said most of these people will be applicants with multiple problems--for example, diabetes, high blood pressure and heart damage. Other diseases that typically render applicants uninsurable are AIDS-related illnesses and certain types of cancer.
The company now rejects about 5% of its applicants. Zervakos said that the rejection rate could double to 10%, but he would consider a 15% rejection rate unacceptable.
Doing away with exclusions and waiting periods streamlines coverage and will save Blue Shield money in administrative costs, Zervakos said. He added, however, that the company expects those savings to be outweighed--at least initially--by added payouts in benefits.
About one-quarter of Blue Shield's current individual enrollees currently have some sort of exclusion in their coverage.
The net effect, Zervakos predicted, is that Blue Shield will increase its share of the individual market, adding as many as 15,000 more new members than it would otherwise have attracted. He explained that some applicants have refused Blue Shield coverage in the past because they were unhappy with the exclusions. Lucian Wulsin, a health-care consultant who helped devise the reforms to California's small-group health insurance system that took effect last July, said Blue Shield's elimination of exclusions will amount to little more than "window dressing" if it tightens its rejection criteria too much.
"I think that step by step, the market really is trying to push the envelope," Alan Katz, a Los Angeles health insurance broker said. "If they all start copying each other's moves, we may get real reform ahead of the reformers."