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At Hearings on Blues, Views of New System

July 20, 2008

By Jane M. Von Bergen, The Philadelphia Inquirer

Jul. 20–No wonder more than 100 people lined up to testify at four days of what sounded like an utter yawner — Insurance Department hearings on the proposed merger of Pennsylvania’s two largest health insurers.

Some of the most powerful people in health care in the state sat captive in hotel ballrooms — forced to listen during hearings in three cities.

Officially, those who testified — and all comers were welcome — were there to discuss the pros and cons of merging two “Blues,” Independence Blue Cross and Pittsburgh’s Highmark Inc.

But, given the firepower in the room, many who testified did so with other issues on their agendas. The portentious hearings ended up eliciting a striking variety of salves for the hurting health-care system.

“These are the big cheeses in the insurance business,” lactation consultant Nikki Lee, who testified at the Philadelphia hearing, said later. She said when she signed up to speak, she was hoping the “Blues” chief executives would be there.

And indeed they were — they had to be.

Accompanied by a plethora of vice presidents were chief executives Joseph A. Frick from Independence Blue and Kenneth R. Melani, of Highmark. They control the companies that control the purse strings in the health delivery system.

Running the show was Pennsylvania Insurance Commissioner Joel Ario — the man who enforces the rules, surrounded by a dozen of the department’s policy wonks and attorneys.

In the audience, a smattering of legislators waited to testify along with the heads of influential associations representing doctors, hospitals, insurers and dentists.

Also listening as they waited for their turns at the microphone, were chief executives of regional health-care giants from around the state. In Philadelphia alone, the lineup included the heads of the University of Pennsylvania Health System and Children’s Hospital of Philadelphia.

“I view this merger as an opportunity to shape a new health-care system for Pennsylvania,” Michael Laign, chief executive of Holy Redeemer Health System in Montgomery County, said.

And what, in the view of some of those testifying, would that system look like?

Government insurance

If Walter Tsou had his way, insurance companies like Highmark and Independence Blue Cross, wouldn’t need to merge because they wouldn’t exist.

“It is time for us to finally admit that the private health insurance model is a failure,” the city’s former health commissioner said in Philadelphia.

“Instead,” Tsou said, in support of a single-payer system, “we should pick a public model which can work even in a downturn in the economy.”

More breastfeeding

“Breastfeeding seems to be some kind of fluffy extra,” complained lactation consultant Lee. In the 1990s, she said, an Independence Blue Cross health maintenance organization stopped including lactation consultants in its network.

Instead, insurers should be doing more to encourage breastfeeding, given its benefits on the health of babies and their mothers, she said. Lee delivered her message in a presentation complete with movie-screen sized slides of women breastfeeding.

Standardized coding

One of the main reasons the Blues want to merge, they say, is to streamline administrative costs. William Hawes, a former employee of Highmark’s predecessor company, offered his perspective.

Retired now, “I work for Giant Eagle [supermarket],” he testified in Pittsburgh. “There’s a code for bananas, 4011. If you go into a Kmart, a Wal-Mart, the code is the same. Why could not this be done in regards to health insurance,” to code diseases and procedures?

“Much money can be saved.”

Reinsurance for all

That’s what Laign, the Redeemer chief executive, calls his idea.

Laign suggested that the state “create a large risk pool” funded by citizens to cover catastrophic medical emergencies.

Most insurance policies include a reinsurance component for catastrophes.

With his plan, he said, the state would bear the worst risk, but spread it among all citizens, making health insurance more affordable.

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Coming Tomorrow

Commissioner Joel Ario tells how he started out at Harvard Divinity School and ended up running Pennsylvania’s Insurance Department.

Contact staff writer Jane M. Von Bergen at 215-854-2769 or jvonbergen@phillynews.com.

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Copyright (c) 2008, The Philadelphia Inquirer

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