Anthem Blue Cross President Erin Hoeflinger answers questions about health care costs

by Lesley Politi on November 3, 2008

Anthem Blue Cross President Erin Hoeflinger answers questions about health care costs

Friday, October 31, 2008

Joan Mazzolini
Plain Dealer Reporter

Erin Hoeflinger moved back to her home state of Ohio to take over as president of Anthem Blue Cross and Blue Shield in February, but it has turned into a volatile time for insurers and those insured.

Hoeflinger, 42, grew up outside of Dayton and has moved up quickly at Anthem. She previously was president of Anthem Blue Cross and Blue Shield in Maine.

Anthem is one of the largest insurers in Ohio with more than 3 million members statewide. However, earlier this year, Anthem pulled out as one of Ohio’s Medicaid managed care providers.

The company had its start as the Cincinnati-based Community Mutual Blue Cross-Blue Shield. In 1995, Indianapolis-based Anthem merged with Community Mutual. In 2003, Anthem, then in nine states, including Ohio, bought out a larger rival, California-based Wellpoint.

The economic turmoil – including bank failures and wild swings in the stock market – are affecting everyone, including major health insurers.

Anthem’s parent company Wellpoint recently announced it would write off more than $200 million in losses from Freddie Mac and Fannie Mae stocks the company held.

Even before the financial turmoil, Americans were concerned about keeping their health-care coverage. Numerous polls showed many forgoing doctor visits and not filling prescriptions for drugs because they can’t afford the out-of-pocket costs.

As health premiums go up, employers shift more costs to workers, in part to stay financially afloat. Last year, employer-sponsored health insurance premiums went up by more than 6 percent, two times the rate of inflation, according to the Kaiser Family Foundation.

Hoeflinger talked with The Plain Dealer about Ohio’s insurance market, the push to reduce costs and other health-care topics. The interview was edited for space and clarity.

Qoes the turmoil in the stock market af fect Anthem?

At affects everybody. It certainly affects us, from our investments. It affects our customers and their investments. With the Fannie Mae issue, we’ve gone through our own set of difficulties.

Qhe McCain and Obama health-re form plans are very different. Have you come out in favor of one plan over the other?

Ae have not. I’m not sure we have a prefer ence. I don’t think they are going after all the pieces that they should. Access is critical.

If you don’t look at health-care costs, it just feels like the mass. It broadens access but doesn’t go after costs.

Qhould the first place to start to bring down insurance costs be to go after administrative costs?

Ae work every day to bring down adminis trative costs. I would tell you we have done that year over year, at least for the past five years. People talk a lot about the profits, or just the administrative costs.

I think the last study showed that overall health-care costs, all the health-care costs in the system, administrative costs, including profit, including costs for our customer service, the whole nine yards only accounted for 5 percent of those costs. That’s not profit, that’s answering the phones, adjudicating claims, doing everything. The profit, it’s more like 3 to 6 cents on every dollar.

People see the rising costs of health care and say how do we reduce it? The first place people look is the person who sends the bill.

Health insurance has moved into talking about wellness programs, implementing wellness programs.

Product arrays to help reduce health-care costs and bringing down the overall costs of health care. Getting that message across.

I think we’re part of the answer. We’re all in this together.

Qow would you re duce health-care costs, where would it be?

Ae know today that 50 percent of the care provided is not the right care, we have to go after that.

We have to change the fundamentals of health-care delivery if we’re going to move the dial.

Today, we incent [pay] providers on a per-episode basis. They’re in business as well. So more episodes is more money. They’re certainly making sure they take care of their patients.

I think moving into a model we’re looking at today, they’re calling it the medical home. The provider is back to being the home base. We would give more payments to the physician and get upfront care that’s correct.

We’ve come out with our consumer-directed health-care programs. It gives our consumers choices [such as] health savings accounts, health reimbursement accounts, so they can get more control of their health-care dollar. We have to give them the right information.

People I have met with across the state, and over and over again I hear that they understand the costs of health care. They understand.

We have to make sure we give people the tools. We implemented Anthem Care Comparison, which is an online comparison tool of outpatient procedures that gives you the cost and quality and how far it is from your house.

To reach this Plain Dealer reporter:, 216-999-4563


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