The following is Blue Cross’s position on the cost to the state of UnitedHealthcare’s proposal compared to its own. Of course, if United wishes to provide a rebuttal, I will publish that. I remain concerned about the process that led to UnitedHealthcare’s getting the contract. Flawed analysis could cost the state and its employees $1 billion Contract was awarded on promises rather than actual data The Employees Retirement System of Texas (ERS) announced last week that it awarded its health plan contract, covering roughly 440,000 State of Texas employees, retirees, and dependents to UnitedHealthcare.  ERS cited that the move from Blue Cross and Blue Shield of Texas (BCBSTX) to UnitedHealthcare would produce $41 million in savings – almost half of these savings are from an expected penalty from UnitedHealthcare because ERS expects UnitedHealthcare to miss their claims cost projections in the first year. A realistic comparison would have shown that losing BCBSTX as a partner could cost the state and its employees $1 billion over the next four years. BCBSTX provider agreements are superior  – $400 Million

  • ERS’ cost analysis compared “current” BCBSTX arrangements to “projected” UnitedHealthcare arrangements.
  • Analysis performed by consulting firm Milliman clearly demonstrates that BCBSTX has a 5% cost advantage over its competitors.
  • Analysis performed by consulting firm AON/Hewitt demonstrates that BCBSTX has over a 2% discount advantage over its competitors.
  • BCBSTX will deliver savings of over $400 million as compared to UnitedHealthcare.
  • Comparison of the Individual insurance rates confirm significant advantage to BCBSTX of 10% to 30% over UnitedHealthcare.
  • BCBSTX provides demonstrated savings as opposed to promises from UnitedHealthcare that even ERS does not believe.  ERS’ own projections are that UnitedHealthcare will fail to deliver on guaranteed savings.

BCBSTX has the largest provider network  – $150 Million

  • BCBSTX has 1,500 more physicians and 27 more hospitals than UnitedHealthcare.
  • This means that more claims will go out-of-network with UnitedHealthcare which will cost the state over $150 million.

Care is being disrupted.  ERS indicated that 9,700 people will have to change their Primary Care Physician, it did not indicate the disruption to specialty and hospital care. Costs shifted to state employees and retirees – $450 million

  • ERS will lose access to the BCBSTX ParPlan network. Without it, employees and retirees will be balance billed because they will no longer have access to BCBSTX’s “safety net” network.
  • ERS reported 16,000 state employees will pay an additional $10 million because of the loss of BCBSTX’s ParPlan network.
  • BCBSTX data shows that in FY11 over 100,000 people saw a ParPlan provider and were protected from over $110 million dollars in balance billing for the year – $450 million over the next four years.