Brad M. Fluegel

Health Care Reform - Insurance

Everyone has a right to affordable health care. On this, we all agree. But, after months of meetings and debate in Washington, will health reform end up costing you more?

Brad Fluegel, VP of Chief Strategy and External Affairs Officer for Wellpoint/Anthem Blue Cross/Blue Shield joins the show to discuss a recent Senate Bill that could raise our Insurance premiums by as much as 200%. Something MUST be done...but what?

Brad M. Fluegel, Executive Vice President & Chief Strategy and External Affairs Officer WellPoint, Inc. - Brad Fluegel is WellPoint, Inc.’s chief strategy and public affairs officer, overseeing corporate strategy, marketing, public affairs, innovation, public relations, and eBusiness. Mr. Fluegel, an executive vice president at the company, started at WellPoint on October 16, 2007. Prior to joining the company, Mr. Fluegel was senior vice president, national accounts, for Aetna. In that role, Mr. Fluegel was accountable for the profit and loss of Aetna’s national accounts business and was responsible for developing and executing strategies that expanded the company’s position in the market. Previously, he was vice president of enterprise strategy for Aetna, working closely with the company’s executive committee and board of directors to advance the company’s strategies. Before joining Aetna, Mr. Fluegel was chief executive officer and principal at Reden & Anders, a national actuarial, management and clinical consulting firm that specializes in financial and business decision support specifically targeted at the health care industry. He also was principal, health care sector leader, for Tillinghast-Towers Perrin, a management consulting firm. Mr. Fluegel also was director of product development and implementation at Harvard Community Health Plan in Boston and a senior auditor in the health care division at Arthur Andersen, LLP. Mr. Fluegel is a lecturer at the Wharton School of Business in the Health Care Management Department. He earned his degree in business administration from the University of Washington in Seattle and a master’s degree in public policy from Harvard’s Kennedy School of Government.

Our star talk host, Dr. Derrick DeSilva, MD recently spoke with Brad Fluegel, Executive Vice President and the Chief Strategy and External Affairs Officer for Wellpoint, Inc.

Dr. DeSilva: Will health care reform cost most of us more money?

Mr. Fluegel: Yes, we are quite concerned that health reform, as currently contemplated, will have the unintended consequence of increasing insurance premiums.

Dr. DeSilva: You think it will increase the insurance premiums….Why?

Mr. Fluegel: Well, at the request of policy makers and members of Congress, particularly in the fourteen states in which we operate Blue Cross/Blue Shield plans, we have conducted a study that looks at real individuals in real small groups, and what the impact of health care reform currently being debated in Congress might have on different kinds of people in these states. And what we found is that premiums for small businesses would increase. For 70% of those small businesses, an increase of about 12% over what they would otherwise be. It’s even more adverse for individuals. These are people who buy their insurance coverage directly themselves, and not through an employer group. We found that our rates would double in most states, about 85% on average. And in some instances, particularly for younger, healthier individuals who currently get the best rates today, their rates would go up by about 200%.

Dr. DeSilva: Now, let me put this in perspective here. You are an insurance company, right?

Mr. Fluegel: Indeed.

Dr. DeSilva: You should be, and I am not busting your chops here, okay…I am just trying to make a point… you should be thrilled that you are going to make more money.

Mr. Fluegel: I think that is a misconception. If the marketplace in which we offer our products doesn't work - meaning that people are not encouraged to purchase coverage - and they can get coverage whenever they want…. I mean, think about it from an auto insurance perspective, if people could go buy insurance coverage after they had a car accident and that coverage would pay for the repairs of that car, nobody is going to buy insurance coverage until such time as they absolutely have to. You could imagine what that would do to auto insurance rates. The same thing could happen to health insurance marketplaces. It could create an extremely difficult environment where premiums go up and, in fact, the market is ruined for everybody.

Dr. DeSilva: Is President Obama trying to save face in trying to get this thing through?

Mr. Fluegel: I am not sure if he is trying to save face, or . . .

Dr. DeSilva: Well, save face, let me say it, saving face meaning this was one of his big campaign things. But, quite honestly, even the democrats are not supporting him, because if they were, this thing would have been passed and done already.

Mr. Fluegel: Right, it's a very complicated issue as you well know, and it affects 1/6 of the American economy. It affects every working family in America. And I think that what we've not had, unfortunately, is really an open, honest debate about what the real drivers of costs are. Instead, we are focused more on political rhetoric as opposed to looking at the facts as to what would ultimately benefit the country. And we are firmly supportive of comprehensive, sustainable, bipartisan healthcare reform. We think that is absolutely essential. And what we are getting now, unfortunately, or the direction that we seem to be heading in, is going to be counter to that.

Dr. DeSilva: I just don't see how a bunch of criminal politicians can make laws at all. You know, I think I said this to you before, and anytime we talk about this, I think the first thing we have to do is we've got to get the career politicians out of Washington. I think they are too biased. I think they have got too much up their sleeves as far as a lot of these pharmaceutical companies, and a lot of the other companies, I don't think that they can make real decisions that are good for the people in this country.

Mr. Fluegel: And I think we are seeing some of that play out in the healthcare debate. Again, instead on focusing on things that would ultimately improve affordability and quality of care in the country, we are instead focused, unfortunately, on political rhetoric.

Dr. DeSilva: What's the solution?

Mr. Fluegel: Well, I think that one of the things that we would like to see happen is that we all have a role to play in the healthcare issues that the country faces. Insurance companies certainly have a role to play to make coverage more accessible and to streamline a lot of the administrative policies, which sometimes frustrate our members and physicians that they interact with. But, hospitals need to practice more consistently with clinical evidence, as do physicians. Pharmaceutical manufactures need to play their role in this as well. And we all as members of the public need to do more to take better care of ourselves and be less of a burden on our healthcare system. So I think what we need to do is pull all the experts together to have an honest and a fact-based discussion about how to begin to make progress towards improving the system without destroying what is currently working today.

Dr. DeSilva: What about malpractice reform?

Mr. Fluegel: I think that's a substantial issue. I think it's a substantial issue for three reasons. One is those premiums that physicians have to pay are quite high and add to practice expense which ultimately gets billed into reimbursement rates, and ultimately, insurance premiums. Physicians, because they're afraid of being sued, practice what you well know as defensive medicine, ordering tests that they don't think are necessary just to protect themselves from future liability. And it has become such a burden for some specialties in some geographies that some physicians are just making the choice that it is just not worth practicing medicine anymore. And so, medical malpractice reform is something that we think is very important to helping solve these problems.

Dr. DeSilva: Is that being addressed in Washington?

Mr. Fluegel: It isn't being addressed completely. As you know, the President mentioned it in his healthcare speech a month or two ago about looking at different ways of doing it. There has been some discussion in Washington about that, but there has not nearly been enough focus on that as a way to help affect medical costs.

Dr. DeSilva: I honestly don't see the light at the end of the tunnel. I truly don't. I think it is going to cost us more. I think it is going to cost us a tremendous amount of confusion with the consumer.

Mr. Fluegel: I think that's right. These reforms are very complicated and there is also a variety of transition issues. I know there is a lot of talk about if you like what you have, you can keep it. But, that's not quite how it will play out. If premiums are beginning to escalate quite rapidly, and there are requirements as to what products you can and can't buy, how the subsidies will and won't work, there are a whole bunch of things that I think are going to wind up confusing people more than clarifying things for the average American.

Dr. DeSilva: From your perspective at WellPoint, do we know why premiums need to go up?

Mr. Fluegel: Well, premiums are going up because underlying medical costs are going up. So, the fees that hospitals and physicians charge are increasing quit dramatically. Some of that is in fact driven by the fact that Medicare and Medicaid, which insures a substantial number of Americans, underpays physicians and hospitals. And what those physicians and hospitals wind up doing is just shifting those costs onto working Americans who wind up paying more. A study by a well regarded actuarial firm calculated that to be about $1,500.00 per family because Medicare is not paying its fair share. So, you know, that's something that really needs to be addresses as part of any reform activity. We also have aging of the population where we are much healthier than we used to be…. we have new technologies, all of which drive up costs as well.

Dr. DeSilva: Right, people are living longer, people are fatter, people are more out of shape, so we’ve got so many issues that are impacting this whole thing. Are you, as a company, involved with the Obama Administration at all?

Mr. Fluegel: We continue to provide information and input into the process and using our real world experience, operating with a substantial amount of depth in fourteen markets across the country to provide information to help them make better choices on the policy side about what we've seen work and what we've seen not work. So, we continue to be active participants in that process.

Dr. DeSilva: Mr. Brad Fluegel, the Executive Vice President & Chief Strategy and External Affairs Officer for Wellpoint, Inc. Thank you for joining us sir. Please keep us informed as this debate continues. Their website address is www.wellpoint.com. I'm Dr. Derrick DeSilva. Folks, have a great day. God bless you all. Until next time, may you always be blessed with good health.

Dr. Derrick DeSilva

10 / 27 / 2009