July 15--With the U.S. Supreme Court upholding the Affordable Care Act, all eyes are on how the health care reforms will be implemented. That puts the nation's health insurers front and center.
In Western New York, the largest insurer is HealthNow New York, the Buffalo-based parent of BlueCross BlueShield of Western New York, led by CEO Alphonso O'Neil-White. As with its rivals, HealthNow has been preparing for the reforms, particularly the development of health insurance exchanges. At the same time, it's keeping an eye on its rivals, locally and nationally.
Q: Is the Affordable Care Act, the health care reform law, good or bad?
A:It has raised the level of the conversation about health care in the country. It has raised the profile of health care in the country. You have even average citizens talking about reform of the health care system, and you didn't have that before. That's a good thing to that extent.
Secondly, we live in New York State. We have many of those reforms already in place that were in place well before the Affordable Care Act was passed. So in that sense, there are a lot of things that weren't new to us.
Q: Is it less of an issue in New York State?
A: I wouldn't say it is less of an issue. There are some things in New York State that will change as a result of the statute. The individual mandate, for example, doesn't exist in New York. And our position is if you're going to have those kind of reforms, the individual mandate is a crucial part of that reform, because New York State is the poster child for how the reforms don't work without the mandate. Because we essentially don't have an individual market in New York State, the costs are simply astronomical for individuals seeking health insurance.
Q: What other changes are needed in health care?
A:I don't think that overregulation of the market is the way to generate the changes that need to be made, and that's something we're very much concerned about. For example, with the exchanges, we are hoping that New York State will take a less regulatory approach to implementing the exchanges, and allow a little bit more flexibility and allow the market to operate without an overlay of burdensome regulation.
Q: How would you see that market operating?
A:I think the participation by insurance companies on the exchange should not necessarily be mandatory. There should be a market outside of the exchanges, if consumers want that, for example. I think those are two key aspects that we would like to see with the exchange market, because we think exchanges are coming anyway. They're coming in the private sector.
Q: Why aren't there more competitors coming in to the Western New York health insurance market?
A: I think they are. We've been waiting and watching for competitors entering our marketplace. We've had some regional competitors. For example, MVP, which is based in Albany, has moved into the marketplace. GHI, which is now Emblem, they've been in the marketplace for a while. And in the Medicare segment, Humana and United have moved into the market. These are two national firms. And we're now beginning to see some advertising in the market from Cigna and Aetna.
So, there are no barriers in our marketplace to entry from competition, and we welcome competition.
Q: What's the relationship these days between the insurers and the providers?
A: One of the good things about the Affordable Care Act is it has raised the profile of the conversation about health care. It's also stimulated a better level of conversation between providers and payers, and I think that that's a very, very good development, because that's something that we've been striving for ever since I've been here, to improve our relationship with our providers. Because in the final analysis, we all have the same goal, and that is to provide affordable health care for the community, and so it really doesn't make sense for us to be in an adversarial position with each other.
Q: A lot of focus has been put on quality of care, but are such efforts paying off?
A: We'll have to wait and see, because these are new concepts, but I think they will in the long run. I think we're beginning to see some of the impact of some of these new initiatives. There are quite a few of those kinds of initiatives that are already in motion in our health care marketplace, and I think we'll begin to see those things pay off.
Q: What about consumer-driven health care?
A:Consumer-driven health care is old, but new again. If you've been around as long as I have, you remember what health insurance was back in the day. It was a cost-sharing arrangement. There were high deductibles. There were co-payments and co-insurance. I guess the original health insurance product was hospitalization, where the health plan pays 80 percent and the consumer paid 20 percent. The high-deductible health plan basically hearkens back to that time when we all had skin in the game in terms of managing our health care costs.
Q: Regarding HealthNow, your strategy has evolved over time, and you've had a number of changes. What is your strategy now?
A: We are actually having a strategy session that will include our board of directors and our senior management team. We're looking at refreshing our strategic positioning right now, but I don't expect it to change dramatically from where we are right now.
We're in a complex industry that's undergoing seismic changes in the environment, and you've got to be able to flex with that. You've got to be agile and you've got to be quick with a response, and in some cases try to drive changes in the marketplace.
We are an industry subject to massive forces, many of which we can't control, and so I think that any changes we've made internally, with respect to our operation, are all designed to address those changes and forces.
Q: Is it a tough industry to operate in?
A:It's gotten tougher. It gets tougher every day. This is an industry where margins have always been very, very thin. It's not an industry that's generating major, major surpluses, so in that respect, it's a difficult industry.
You are managing health care risk, and that means trying to manage the cost of care, which we don't really have control over. We try to influence it, by encouraging people to be healthy and fit. And that's a complex operation. so I would say it is a tough business.
Q: What potential do you see in the industry for consolidation?
A: I think we went through a period of consolidation in the industry, and I think you've probably seen a shift in what's happening in terms of health plan consolidation.
You're seeing health plans attempting to do some vertical integration, for example, health plans buying hospital systems, health plans partnering with providers.
Q: Do nonprofit health care CEOs merit the kind of salaries you get?
A:First of all, this is not really a job, in your typical sense. Somebody once said to me that this is a lifestyle. When I leave the office, I'm not off-duty. We have as an organization committed to being the best that we can be, as a health plan.
We're not just a local plan. We have locations in several parts of the state. We have a location in Philadelphia. We have locations in California. We're licensed nationally to be a TPA (third party administrator) in all 50 states.
So we're a national company, and we are committed to getting the best and the brightest, and so we look to a national pool of people to choose from. In order to do that, you've got to have compensation from top to bottom that's competitive. So this is something that we take very seriously. We're competitive. We have to be, if we're going to stay alive and be successful.Q: From your perspective as a corporate citizen, how is Buffalo doing and what needs to be done?
A: I am an enthusiastic Buffalo booster. We've been able to recruit people nationally, from national companies, to come to Buffalo to work for us. That's because we've been able to show them all the great things about this city. In terms of how it's doing, I think there are a number of really exciting things happening in the community that are really gaining momentum, and I think in the next four to five years, we're really going to see the city blossom.
I think the region has really begun to realize that the urban core, the city of Buffalo, is really crucial to the vitality of this community, of this region, and as a result of that, we're beginning to see some really positive things, and we have a governor who is really amazing in terms of his commitment to the region. That's a very hopeful sign.
Q: Is the business community taking a more active role in the city than in the past?
A: That's my sense, yes. I do sense that the business community is beginning to flex its muscle, and not only speaking out, but they're putting their money where their mouths are. They're committing to the city. They're investing in the city.
I would say yes, the business community is actively supporting the redevelopment of Buffalo.
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