My previous entry contained a letter that I wrote to Blue Cross Blue Shield of Massachusetts, in which I shared my outrage over the massive increase in my monthly health-insurance premium and the managed-healthcare system in general. To their credit, Blue Cross Blue Shield has responded. So, in the name of fairness, I include for you here the correspondence I received from Dan Sarno, the Ombudsman for Blue Cross Blue Shield, whom the company’s CEO asked to respond to my complaint.

Hello Mr. Zahlaway,

My name is Dan Sarno, and I’m the Ombudsman for Blue Cross Blue Shield of Massachusetts. Cleve Killingsworth has read your email and he asked me to respond to you.

First, thanks for your email. Let me explain why your premiums went up over the past 13 months. It’s no secret that health care costs and the use of health care services are increasing at dramatic rates – and they continue to increase. Some of the leading contributors to premium increases include new medical and technological advances that are improving the quality of medical care.

In your particular case, your spouse Kimberly (the policyholder) moved from the 31 to 35 age bracket we use into the 36 to 40 age bracket, causing your rates to go up more than usual. Premiums for your health plan (HMO Basic Blue Direct) are determined by age bracket and zip code.

(On the topic of health insurance costs, you may not be not aware that the new health care reform law will result in more affordable health plans for consumers like you who purchase insurance directly from companies like ours. If you’re interested in learning about these new health plans as they become available, check the state’s new Health Connector website: www.mass.gov/connector.)

I would like to tell you about just two of the ways our company is trying to keep down costs. We’re helping members better manage chronic diseases. This helps them lead healthier lives and has a direct impact on the overall costs of medical care. We’re also working with doctors to identify ways to reduce medical errors that will also lower overall costs.

Also, we’re taking every opportunity to drive down administrative costs. As a not-for-profit company, most of the premiums we collect go to pay claims. Ninety cents of every premium dollar we collect is spent on claims. Eight cents goes to administrative costs, including salaries for all of our employees. About two cents goes to our financial reserves.

You raised an important question about executive compensation. Blue Cross Blue Shield of Massachusetts is an $11 billion dollar company that competes for business and employees with other companies, both for-profit and not-for-profit. Every year, we use an independent human resources consulting firm to analyze our compensation and make sure it’s consistent with the marketplace. This helps us attract and retain first-rate business leaders who manage our company.

Thank you for letting us know your concerns. We appreciate your membership with Blue Cross and Blue Shield of Massachusetts.

Sincerely,

Dan Sarno
Ombudsman

His answer doesn’t make me feel any better about the size and timing of our premium increase, but, if nothing else, I appreciate that he took the time to write it, and that he managed to do so in a civil tone—which, admittedly, isn’t the tone I employed in my own letter and, especially, the heading under which it ran.

Now, if you’ll pardon me, I have to get back to collecting cans; my insurance payment is due in a few days.

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