Blue Cross and Blue Shield of North Carolina is defying the trend of rising ACA plan premiums by lowering individual rates by an average of 4% in 2024. CFO Mitch Perry attributes this success to a steadfast focus on customer-centric care, value-based programs, chronic care management, and effective pharmacy cost negotiations. Operating in all 100 counties of North Carolina, the company balances urban and rural market demands. Perry advises insurers to prioritize stability and understand market dynamics, while acknowledging the growing importance of the individual marketplace in the long term.
In a climate where health insurers are poised to raise premiums for individual exchange plans in 2024, Blue Cross and Blue Shield of North Carolina stands out as an exception. The insurer has announced a welcome surprise for its members: a projected average decrease of 4 percent in individual rates for the upcoming year. This stands in stark contrast to the national trend, with many insurers proposing double-digit premium increases, and the median premium increase request sitting at 6 percent, according to KFF.
Remarkably, despite the ongoing rise in healthcare costs and inflation, Blue Cross and Blue Shield of North Carolina, headquartered in Durham, is on track to reduce individual ACA plan rates by 5 percent compared to 2018 figures. This effort is expected to collectively save members a substantial $1.35 billion during this period. It’s important to note that individual premiums will still vary, contingent on factors such as location, age, the specific plan, or federal subsidies received.
To gain deeper insights into how Blue Cross of North Carolina has managed to defy the national trend and lower individual premium costs, Becker’s had the opportunity to interview the company’s senior vice president and CFO, Mitch Perry. Blue Cross NC, which serves over 4.2 million members statewide, including nearly 430,000 individual ACA members, is taking proactive steps to prioritize its customers’ well-being and financial health.
Question: Blue Cross NC is lowering individual plan premiums by an average of 4 percent next year. What has your team done to bring costs down?
Mitch Perry: Having served in my position for over seven years, I’ve witnessed the evolution of the ACA. In its early years, we were essentially the sole operators, serving just a few counties. That stability laid the foundation for some of the success we’re experiencing today.
Our primary focus has consistently been on our customers and their well-being. We’ve been unwavering in our commitment to delivering high-quality care while concurrently reducing costs on their behalf. Crucial to this effort are our partnerships with healthcare providers, particularly the success of our value-based Blue Premier program. This program includes participation from 12 of our largest health systems, encompassing the majority of primary care. Additionally, we’re keenly focused on chronic care management and offering innovative solutions to ensure our customers access the most appropriate care, be it through telehealth or alternative care settings outside of hospitals.
Pharmacy expenses have been a major driver of high costs, but we’ve been effective in negotiating favorable rates. We’re also working diligently to support chronic care management by ensuring that the right prescription reaches the right place for the right duration. Establishing convenient access points, whether through mail-order services or pharmacies, has also contributed significantly to our cost-saving efforts.
Q: Blue Cross NC is the only insurer that has offered plans in all 100 counties of North Carolina since the ACA market first opened in 2014. How challenging is that to maintain?
MP: It’s an integral part of our identity, but it certainly comes with its challenges. Maintaining a presence in all counties requires a multifaceted approach, where we must cater to the needs of members in both urban and rural areas. In urban regions, we work closely with providers to offer cost-effective options, while in rural areas, our focus is on tailoring solutions that align with the unique demands of those markets.
Q: What advice would you extend to insurers looking to expand within the individual market?
MP: The individual market is inherently price-sensitive, especially considering the influence of subsidies. Carriers need to prioritize market stability and affordable access. We’ve seen instances where carriers entered the market with inadequate networks or set their prices too low in an attempt to capture market share. Such strategies often lead to instability and disrupt the marketplace when they exit, affecting not only the state but other carriers and members as well. To succeed in this market, insurers must thoroughly understand its underlying dynamics. Furthermore, product evolution, particularly in the realm of digital capabilities, is crucial.
Q: Some industry CEOs say the individual marketplace is going to be the dominant way that consumers shop for health insurance in the long term. Would you agree with that?
MP: It certainly appears that the health insurance exchange is here to stay and has become a significant marketplace. Its growth from its early days, where we were among the few participants, underscores its enduring relevance. Whether it becomes the dominant method will likely depend on the evolution of employer markets and our ongoing efforts to facilitate affordable coverage for employers.
Q: Final thoughts?
MP: I want to emphasize the paramount importance of stability. As the CFO of a not-for-profit organization, financial stability is at the forefront of my concerns. Our access to capital is limited, which underscores the need for us to remain financially strong. This financial strength allows us to take action and make investments necessary to support our customers, particularly as the marketplace continues to evolve. Every financial decision we make is centered on ensuring our long-term presence across the state and our ability to serve our members effectively.
