Bloated Blue Cross

One company is the perfect example of how just how broken our health care system has become and that is Blue Cross. They are in the business of making money, not providing efficient care. Blue Cross and their billions may be the biggest impediment to health care reform in California. Their profit margin and bloated bureaucracy is obscene. ContraCostaTimes:

When Blue Cross sells health insurance to someone who isn't covered at work, the company typically makes a 27 percent profit. By the time salaries and other administrative costs are accounted for, only half the money the company collects in premiums from that person goes for medical care.

Those figures may help explain why Blue Cross -- the insurance provider for roughly one in four people in the state who have health coverage, and with political heft in the Capitol to match -- so far is the only major insurer opposing Gov. Arnold Schwarzenegger's universal health care plan.

They make the biggest profit of any of the top insurers from the current system. Blue Cross has the most to lose from any reform, even Arnold's. Given their profit motivation, it is likely that they will "emerge as a potent force in the debate" over health care reform.

Schwarzenegger's plan would require 85% of all premium dollars go towards medical care, not overhead or profit. Blue Cross currently spends between 51 to 79%, depending on the insurance plan.

They make huge profits off of cherry picking healthy young people and denying coverage to applicants with minor ailments.

"The idea that you have to sell health insurance to any comer is antithetical to their business model," said Peter Harbage, a health care expert at the nonpartisan New America Foundation who has advised the governor. "It's not how they make money."

Blue Cross recently was fined $1 million by the state for dropping members who became sick or pregnant, the second such penalty in less than a year. The company says the cancellations were justified, but some say the fine is just one example of a company driven excessively by money.

Blue Cross "is known as the most aggressive in trying to avoid covering people who actually need care, and the most aggressive in offering scaled-back, bare-bones plans," said Anthony Wright, executive director of Health Access, a consumer advocacy group. "In the policy arena they've been the most resistant to reform."

Blue Cross has dropped some serious cash on lobbying over the years, spending $2.5 million in the last state legislative cycle. They will be working the halls of the Capitol hard in an attempt to scuttle any major health care legislation. Blue Cross wants to maintain the broken status quo.