It is no surprise that most of us have been getting fleeced by our health insurance companies over the last decade, where rates keep rising at an annual clip of 15-20% a year (5-6x the rate of inflation) and the underlying benefits keep falling (e.g., higher deductibles, higher out of pocket maximums, and lower coverages). And, the Affordable Care Act ("ACA"), which was supposed to be a good thing, bringing healthcare to millions of uninsured, at a government-promised no impact to currently insured policyholders, ended up creating the opportunity for the insurance companies to turn the screws even further.
They ended up passing along most of the additional costs of the ACA roll-out to their old customers, in the forms of even higher rate increases (40% in the first year alone), and creating a process where you can only make healthcare decisions during a 2-3 month open enrollment period each year (effectively holding customers hostage for up to a year at a time, in anything but an open and free economic way, if the carrier ends up abusing their powers).
We all sat back, watched it happen and said there was nothing we could do about it. But, what Blue Cross and Blue Shield of Illinois ("BCBS") did this year bordered on criminal. And, I needed to share this story of extreme customer abuse, so you don't make the same mistakes with your customers.
THE FACTS
Back in the November 2015, BCBS sent out a note to its individual policy holders (which I have been one for almost a decade), that basically said my current PPO Gold plan was being discontinued, and they were rolling out a replacement PPO Gold plan under a very similar name. It included a list of key changes to the plan, like pricing, deductibles, out of pocket maximums, etc. At first read, it was not a better plan, as the policy terms were worse than my old plan. But, based on the marketing materials, the policy was close enough for my needs. I assumed it was going to be business as usual in terms of my doctors and hospitals, and I followed the automatic transfer process into the new plan.
But, nowhere in their list of significant changes letter, was a clear disclosure that my underlying in-network doctors and hospitals in the network were MATERIALLY being downgraded. BCBS did not renew its relationship with the Northshore or Northwestern medical systems for its individual policy owners, the biggest, most-used, most-respected hospitals and doctors in the Chicagoland area. They only kept them in-network for the corporate/group policy owners.
I learned all of this when my wife went to go for a procedure this month, and our normal doctors and hospital said we were no longer in-network, and our coverage levels were going to be cut in half to the out-of-network levels. Which was a shocker to say the least, especially since we were three days outside of the open-enrollment period to find a new policy, which means we were stuck paying for a crap policy that we would never use (except in an emergency) for the next year, whether we liked it or not. Not a great feeling when you are forking out almost $20,000 per year for what you thought was a "Gold" level product.
When I called BCBS to inquire about it, they told me about the changes above, and said my only options were to: (i) find a new doctor and hospital that is in-network (where the quality and locations of such were far less respected); (ii) switch to their HMO solution (where none of the most respected doctors were in-network, and you lose control of picking your own doctors, as you do in a PPO); or (iii) go find a corporate or group plan where my doctors and hospitals continued to be in-network (which doesn't work well for small business entrepreneurs that are using contractors vs. employees to save on benefits costs). And, even if I wanted to go work for a big company for their insurance benefits, most big companies are hiring fewer on-payroll employees, also relying more on outside freelance contractors for up to 40% of their workforces. None of which were acceptable or viable solutions for me. What a mess!
MY APPEAL TO BCBS AND THE INDUSTRY (and key lessons for how to treat your customers)
1. Market Honestly. If you are going to make material changes to the policy ,especially to its underlying network, that needs to be more clearly disclosed during the open enrollment period, not buried in the fine print, forcing customers to stumble on the problem on their own, when they have their biggest need. That is like advertising a Cadillac plan (under the same "Preferred Gold PPO" name you have used for years) and given them a Yugo where the engine doesn't work when you go to turn the key.
2. Be Loyal to Your Long Term Customers. If you have materially pissed off your customers (18,000 of which in this case), figure out how to be flexible and make it right. Don't dig in with lower quality solutions or deadlines, when you are putting their quality of doctors and hospitals at material risk. It is not reasonable to ask them to drive 30 miles to an in-network hospital they have never heard of, when the best doctors and hospitals are right in their backyard a few miles away. Especially, after many have forked out hundreds of thousands of dollars to you over the years, making very few claims as largely healthy users.
3. Get Rid of the Corporate/Group vs. Individual Policy Distinction. This has basically become a way for corporate lobbyists to figure out a way to help preserve their recruiting advantages (for the 60% of their workers they prefer to hire as employees). All in a world where 40% of the workers for those same companies, and elsewhere, are sole proprietors or freelance contractors that don't qualify for group coverage. To make matters worse, there are no longer trade associations for those individuals to join to get group healthcare rates, as the insurance companies have dropped those channels altogether, trying to save on referral fees. At the end of the day, in the words of the band Depeche Mode, "People are People", and they should all be given the same opportunities for coverage at the same prices, regardless if they are working as employees of big companies or contractors in small businesses. Especially when workers are more mobile than past generations, not working at the same company for more than a couple years, and need a portable health plan that moves with them.
4. Consumers Need Normal Protections. The laws written by our government should never impede fair trade practices. What other product or service does not provide for refunds, credits or returns if the client is not happy with what they bought. Worse, they are legally required to continuing paying for the poor policy in the future, to be compliant with the ACA. Consumers should never be locked into long term agreements for huge sums of money when they feel they are getting screwed based on misleading marketing materials. Get rid of that 2-3 month re-enrollment period limitation. That is anything but a fair and free market. All it does is make it less onerous on the insurance companies, thanks to their lobbyists.
I have been a loyal BCBS customer for most of life, from my parents plans, to my old employer plans to my current individual plans. All in the face of terrible abuse in the form of gouging price increases and reduced coverage levels. Shame on me!! But, BCBS was the "Gold Standard" in my mind. Now, I find myself with my family at risk with sub-par doctors and hospitals located far away from my home, looking for new solutions after the open-enrollment period has ended. And, researching solutions from new in-network carriers, like Aetna or Coventry (but, not Cigna or Humana, who are also in-network, but do not support individual policy owners!!). That is not how you treat your best (highest revenue, lowest claims) customers.
Any successful Chicago-area growth consultants in a similar situation want to join Red Rocket, so we build a group healthcare plan together or join a PEO to leverage their group rates. Being an entrepreneur or small business person, which accounts for over 50% of all the jobs in our country, should not be so onerous when it comes to healthcare decisions. Our, jobs are hard enough as it is. As for BCBS, shame on you!!
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