IBC will halt two insurance programs targeting poor

The region's most fragile and impoverished elderly citizens will lose some of their health insurance in January when Independence Blue Cross stops offering two plans attractive to the poor.

Independence Blue Cross, the region's largest health insurer, began sending letters last week to the 19,000  subscribers of the Keystone 65 Complete plan. Also affected are Keystone 65 Value plan's 17,000 subscribers.

The company says that starting Jan. 1, it can no longer afford to offer these programs because of cutbacks in federal funding for Medicare.

Advocates for the elderly are bracing themselves for an onslaught of calls as elderly subscribers receive the letters and begin to worry about access to their same doctors, drugs, hospitals, and pharmacists.

"It's upsetting," said Alissa Eden Halperin, senior attorney and deputy director of policy advocacy for the Pennsylvania Health Law Project.

"Here you have IBC, which is a nonprofit, which has a charitable mission, significant tax breaks, and a tremendous surplus, and it's dropping its poor-people plan," she said.

Stephen Fera, Independence Blue Cross' vice president of government programs, agrees that it is upsetting. He described the decision not to renew these policies as "extraordinarily difficult."

Both Keystone 65 Complete and Keystone 65 Value are known as Medicare Advantage plans. Senior citizens can get coverage through Medicare, but there are gaps. Medicare Advantage plans fill some of those gaps through a combination of federal government support and additional premiums and co-pays paid by the subscriber.

The Keystone 65 Complete plan is for elderly people who are so poor that they qualify for Medicaid. For them, the cost for health coverage is close to nothing.

Keystone Value is one of Independence Blue Cross's most affordable plans. That plan includes co-pays, but no monthly premium for the basic coverage.

The subscribers will still have coverage through Medicare, with the very poor also retaining coverage through Medicaid. But it will not be as encompassing as what they had, and they may have to seek other providers.

As a group, "they are the lowest in education and they tend to be much frailer, so they tend to be the most vulnerable," said Pamela Walz, codirector of the Aging and Disabilities unit of Community Legal Services in Philadelphia. "We are very concerned about what is going to happen to them. Their choices are becoming more limited."

Fera said that Independence Blue Cross is also concerned and has designed a careful and expansive education program. For example, it is providing names and addresses of its competitors which may offer similar programs.

The changes come as the insurance industry has become the target for criticism from the Obama administration. There has been some talk that the government is spending too much on Medicare Advantage plans - as much as 11 percent to 14 percent over regular Medicare insurance - and that the plans aren't delivering the value.

In February, the Centers for Medicare and Medicaid Services, a branch of the U.S. Department of Health and Human Services, told insurers to expect federal reimbursement cutbacks in the range of 4 percent for Medicare Advantage plans.

"This is a business decision that plans are going to have to take into consideration," said Lorraine Ryan, a Centers for Medicare and Medicaid Services spokeswoman, in Philadelphia.

Fera said that even as the government was cutting reimbursements, medical costs were increasing.

"We have dealt with gaps in prior years," he said. "When you have a gap that's a nominal amount, you can make it up through premiums or cost-sharing or benefit design.

"This was a gap unprecedented in its significance," he said. He said Independence Blue Cross operates on a thin margin of less than 1 percent and couldn't sustain even that margin with these plans.