As chairman and CEO, Bruce Bodaken led Blue Shield of California to become one of the fastest growing health plans in the state – it currently has more than 3 million members. But after 12 years of service, the 61-year-old recently announced his plans to retire at the end of 2012.
Bodaken’s successor, Paul Markovich (the chief operating officer), may not have an easy time of it. He’ll have to implement provisions of the federal health law while trying to keep costs as low as possible. “That will be the biggest challenge that I think any health plan CEO will face over the next several years,” Bodaken said.
Bodaken’s views on the health law and the current state of the insurance industry were among the many topics during a recent interview with Kaiser Health News. Here are edited excerpts:
Q. Why retire now?
A. One thing I told my board when I first came on, after a decade or so, you need to think about changing your CEO as a policy matter. There is a time for these things for any corporation, for any person. I’ve been doing this for 12 years. I don’t see this retirement as me dropping out of sight.
Q. What do you think insurers will have to contend with as they head to 2014, when the federal health law will fully kick in?
A. One of the biggest challenges will just be incorporating all of the new regulations in such a short period of time – and putting those into effect in complex organizations with multiple products with different geographies. Those regulations impact eligibility, they impact how we interact with providers, they impact how we interact with the [health insurance] exchange.
And, of course, we’re not just talking about federal regulations; we’re talking about regulations in California that are peculiar to our state. If you look at all of that, I think one of the biggest challenges will be all of the health plans, providers, everyone in the industry being able to get this right with such complex, in some cases, not-clear regulation.
Early on, I gave (the federal) HHS great credit in that they issued regulations very quickly. Of course it closed down over the election and I think that was expected. But it was a bad time for us to be slowing down because we only have really a few months left before we have to submit to the federal government the outline of our plan.
Q. But Blue Shield of California won’t have to worry because you’re only in California, right?
A. We think we would worry if other competitors are gaining ground as part of a large association of [multi-state] plans. We want it to be sustainable.
Q. Are there challenges that are specific to California’s exchange?
A. A small employer should make a choice about which plans are available to the employees. If each employee is able to make a choice between carriers, it’s going to be very complex and difficult from both a ratings standpoint and for making sure that we have a cohesive group that we can rate against. [If] each member of the group can have a different choice, it’s not clear to us how that works.
Q. There’s been some talk about whether the premium subsides for low income-people offered through the health insurance exchanges could be changed as part of a deal to solve the national “fiscal cliff” predicament. Would that be problematic?
A. Changing the subsidies would be problematic in that this is a bill about expanding coverage for the people who have been least able to afford it. And the impact that the subsidies have on a group that will not be eligible for Medi-Cal or Medicaid is profound. So, in general we would not want to see those subsidies cut back.
I’m a realist and understand that there’s going to be a lot of different issues that are going to be part of any grand deal, any grand bargain, if this is one that has to be modified to address that, I hope it is not too significant. And I hope that it’s clear so that we can get it into place immediately because right now we’re dealing with the current expectations of the current law. If that were to change, it needs to change quickly.
Q. The health law calls for the establishment of ACOs – accountable care organizations – so that providers will coordinate care for patients. Do you have any suggestions about what should happen at the federal level to encourage their success?
A. At the federal level, what would be helpful again would be to not be too prescriptive in the area of accountable care organizations. There are principles that we’re using to organize and I think we’ve developed the greatest number in California of any of the plans there at this point. We have led the field on actual signed contracts that are organized with global reimbursement arrangements.
Watching a thousand flowers bloom I think is a good thing across the states – and even across products, commercial products and Medicare products. We think (ACOs) are going to make a real difference in cost. They’re going to make a real difference in quality and the biggest challenge that we will face are having enough seasoned and experienced medical directors and physician leaders. Physician leadership on the ground makes the difference.
Q. Why do you think the public is still split on the federal health law?
A. The health care law has many pieces to it. The consumer protections that have been put in early on, I think, are well regarded. I think everyone agrees that it is time to get away from a system of determining a person’s health insurance by virtue of their health status. And so, doing away with preexisting conditions was overdue.
Any change is scary until you put it in place and then it seems like it was the natural thing to do two years later.
This law will continue to go through some changes, I’m sure. There’s a lot we’re going to have to experiment with and I hope we’ll be encouraging HHS and the government to allow states to experiment. If we get only the people that need care in the system, it’s obvious that premiums will go up beyond what anyone can pay and that won’t be a success or sustainable. So, while we think it is something that over time people could accept, we need to do this in stages.