Arkansas Blue Cross Prepares for Change

by Mark Friedman  on Monday, May. 21, 2012 12:00 am  

Arkansas Blue Cross & Blue Shield of Little Rock saw revenue rise to $1.27 billion in 2011. (Photo by Mike Pirnique)

White said the company expected the 2012 premium to be about the same as 2011.

ABCBS also has several subsidiaries, including Health Advantage, which it owns 50 percent of along with Baptist Health of Little Rock, Blue Advantage Administrators of Arkansas and USAble Corp.

Growth
Founded in 1948, ABCBS was a fairly small company up until the 1960s, White said. A turning point came with the creation of Medicare and Medicaid.

“I think prior to that, a lot of individuals chose not to buy insurance and a lot of groups chose not to offer it,” White said.

But with the creation of the government insurance programs, health insurance was becoming standard and ABCBS started to see its membership grow.

In the meantime, health care costs were rising. By the early 1990s, “managed care” — the term applied to closed networks of health care providers that were guaranteed access to more insured patients in exchange for discounted prices — had swept the country in an attempt to slow health care inflation.

Traditional indemnity plans that paid 80 percent of whatever a doctor or hospital chose to charge were becoming hard to find for most employee groups.

In Arkansas, the concept of managed care went further than other arrangements. In 1993, market leader ABCBS partnered with Baptist Health to form the health maintenance organization known as Health Advantage.

Some doctors and hospitals were eager to enter into contracts with insurance providers so they would have a steady flow of patients. Other doctors and hospitals also wanted to join the ABCBS network, but they were shut out, which they said was unfair.

In an attempt to make things equal, Arkansas legislators passed the Patient Protection Act of 1995, which requires the same terms as the incumbent in-network providers.

ABCBS fought the legislation all the way up to the 8th Circuit Court of Appeals in St. Louis. The legislation was upheld in 2005 and “any willing provider” went into effect.

Health Care Reform
If the Supreme Court upholds the “individual mandate,” the key provision of health care reform, which requires most Americans to have health insurance, White predicts more changes are in store for ABCBS.

 

 

Please read our comments policy before commenting.