In 1929, Justin Ford Kimball, a hospital executive in Dallas, came up with a nifty idea to help teachers. Noticing that his hospital had a lot of unpaid bills, many of them from educators, he came up with a plan that allowed them to pay $0.50 a month and in exchange they would be covered for up to 21 days of hospital care if they needed it. It was a smashing success as 75% of Dallas teachers enrolled. Other industries wanted in and thus was born what would eventually become the Blue Cross and Blue Shield Association (BCBS).
Here is where old people show their stripes. If you here said something like, ‘well back in my day, things cost ___,’ then you are old.
Did you do it?
Yep, you did.
You are old.
I am not even going to break out the spreadsheet and pretend to do the math on the annual rate of growth required to go from a daily cost of $3.50 to whatever astronomical number the average hospital day costs today, but that I even thought about it…yep, I am old.
If you are not old, ‘two bits’ is a quarter. Hold on to that math as you’ll need it later to make today’s post title make sense.
It is easy to see why, for so long, The Blues were viewed as the cuddlier of the health insurance plans (granted, that was in comparison to relative porcupines and saguaro cacti), them being all local and non-profit and for the people and all.
Well, like hospital prices, things have changed a little.
The 36 ‘affiliated’ (air quotes signal ironic foreshadowing) BCBS plans cover about one in three Americans, almost as many as Medicare and Medicaid combined. Some of the plans are still small and local, but The Blues Club also includes Anthem and its $65 billion market cap.
We point out the supposed affiliation idea of The Association, as its members like to call themselves, because they recently negotiated a $2.7 billion (do the bits math…about 11 billion of them) antitrust settlement with their customers because their practices limit competition. The settlement is not final and still has to be approved by the member plans and the judge. And there is a still pending parallel suit from providers which alleges they used their ‘affiliated’ power to reduce payments.
In addition to the cash, the settlement would eliminate or weaken association rules that prevent various Blues plans from competing with one another. In short, they can’t have it both ways – claim to be 36 independent entities, but then conspire to carve up the market and not compete with one another.
So, our pre-election discussion around this idea of how the governmental referee interfaces with the market continues. It beats discussing the circus called a debate, right?
We tend to like the refs when they call a foul on the other team, don’t we? At least I do.
Good call here ump.