Montgomery Business Journal

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BlueCross BlueShield of Alabama Offers ‘Competitively Priced’ Product

May 2014

By David Zaslawsky   

Photography by Robert Fouts

There has been much written about the Affordable Care Act and BlueCross BlueShield of Alabama has undergone some major changes to adapt to the new health care law. The company had to change its rating model, according to Richard E. Byrd, who as district manager for BlueCross BlueShield of Alabama oversees the Montgomery district, which includes Dothan and Selma.

He said the firm could no longer rate customers on pre-existing conditions or health status or even decide not to offer insurance. “You have to charge everybody the same as long as they are the same age; live in the same area,” Byrd said. As expected the firm has seen an increase in phone calls, but Byrd said a lot of that is people trying to understand the new law.

Because of the new law, the firm now had to collect and charge for fees and taxes associated with the Affordable Care Act.

He said the firm’s costs are ongoing “as we get modifications that are passed down from Washington; clarifications or changes in their interpretations of the law. Those things are conspiring to increase the costs of what we’re doing.”

Although it’s still a little early, Byrd said there has been “a little bit of an uptick” in people signing up for health care insurance directly with BlueCross BlueShield. He said the insurer offers the same plans as the government exchange: metal level plans, which are platinum, gold, silver and bronze. “We adjusted the benefits to meet those metal level plans,” he said. Prior to the Affordable Care Act, BlueCross offered four primary plans. Now there are eight to 10 plans whether an individual goes to the health exchange or deals directly with BlueCross.

Individuals may be eligible for a subsidy to buy health care insurance depending on the size of the family and household income. That subsidy is based on the second-lowest level of the silver plan, according to Byrd, but may be used to purchase any plan. There is not a subsidy with a direct plan with BlueCross, Byrd said.

Blue Cross picks up 90 percent of the expected costs of the platinum plan and the member pays the remaining 10 percent, Byrd said. The gold plan is 80-20; silver is 70-30; and the bronze plan is 60-40.  “The less out-of-pocket for the members are going to be the more expensive plans,” he said, “and the ones where (members) pick up more of the costs will be the less expensive plans.”

BlueCross BlueShield is the only health insurer in Alabama that is in every county and boasts a network of 10,000-plus physicians. “We have a real commitment to not only our members and their health needs, but we also have a commitment to the communities where we live,” Byrd said. He said BlueCross BlueShield “is very community-focused.”

He said that BlueCross BlueShield of Alabama competes against United Health, VIVA and Humana. “We are offering a good product that is competitively priced and I would say – very competitively priced – or we would have additional competition,” Byrd said

“If BlueCross was not being as efficient in how we do things; how we price things; what we offer to our membership – there would be opportunities for competitors to come in and take advantage of that. We work on eight cents on the dollar. We pay 92 percent of the claims dollars or the dollars we receive go out in claims.”

He said BlueCross is a not-for-profit corporation and its administrative expense ratio of 6.6 percent is one of the lowest in the industry. Byrd said some rivals are for-profit companies, which would want returns much greater than eight percent.

Byrd said that competing against that eight percent is difficult for other insurers, coupled with Alabama being a rural state with metros that are not large enough for others “to justify the cost it would take” to build a network.

BlueCross, which has operated in Alabama since 1936, has been successful because of its employees and customer-first philosophy, Byrd said. “Since our beginning, we have proven to be a solid, stable company that cares about Alabama’s future,” he said. “We are ‘The Caring Company’ with employees who are truly concerned about our customers’ well being; who work to improve the community; and who respect each other.”


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