After a difficult 2024 financially, Arkansas Blue Cross and Blue Shield should have a better year this year, CEO Curtis Barnett told the Rotary Club of Little Rock Tuesday (Oct. 28).
The company reported a $226.2 million loss for 2024, according to press reports.
“No question – 2024 was a very challenging year for us,” he said in a question and answer session. “And this year, we’re in much better position. I think this year, right now, we could be a slight loss to closer to break-even is what we’re projecting right now.”
Barnett said the health care sector is in a time of peril and promise – one where costs and utilization are increasing, but also one where technology can lead to new opportunities.
He said the system is coming out of a high inflationary environment with workforce and other pressures. Meanwhile, the past 18-24 months have seen “tremendous growth” in members’ utilization of services, which he attributed to patients deferring care during the COVID pandemic and now accessing it, often in worse health than before.
Nationally, health care spending, currently $5 trillion, is expected to increase to $8 trillion in the next 10 years, he said. Factors contributing to the rise include an aging, unhealthy population where young people in their 20s are being diagnosed with diabetes and other chronic conditions.
The high costs of health insurance led 125 groups of 50 or below to cancel their insurance with Blue Cross last year. Meanwhile, 28% of Americans report they are not accessing care because of cost.
However, Barnett saw reasons for hope because consumers are beginning to have the same expectations for health care that they do other services, which forces the industry to engage with them differently. Meanwhile, care will improve through artificial intelligence and interoperability, where health care systems can communicate with each other and exchange data about a member’s health condition at any time.
“We need a period of time with some certainty, some stability, so that we can begin to advance those promising things at a faster pace than right now, we’re feeling those perilous things,” he said during a question and answer session.
Barnett referenced the current federal government shutdown where Senate Democrats have declined to approve a continuing budget resolution because they want to extend the enhanced premium tax credits that supplement individuals’ health insurance. Created during the Biden administration, those credits helped the market increase from 12 million to 24 million individuals nationally and from 90,000 to 165,000 in Arkansas, he said. But they are expected to sunset at the end of this year.
He said a projected six million people nationally and between 35,000 and 50,000 Arkansans will drop coverage if the credits are not extended. Not only will those individuals and providers be affected, but it also will affect the risk pool because those who drop coverage will more likely be healthier than those remaining.
He believes there is support among both Democrats and Republicans for extending the credits in some fashion.
Barnett said the rising cost of pharmaceutical drugs is the number one issue he hears on his travels around the state.
Among those drugs are GLP-1 drugs such as Ozempic that Blue Cross has agreed to cover for type 2 diabetes only but which many Americans use for weight loss.
Barnett said that after Blue Cross decided to cover the drugs, diagnoses of type 2 diabetes increased by 30%. The implication is that doctors are diagnosing diabetes for people who want to lose weight. But Barnett noted that about 30% of patients drop the drug after the first month, and another 28-30% drop it before finishing the 12-week regimen. That means a lot of very expensive drugs are being wasted.
Asked for a set of practical reforms to bend the cost curve, Barnett offered four responses:
First, everyone should become more involved in health care policy.
Second, businesses should manage their health plan like they do the rest of their business. Those practices would include wellness incentives and working with their insurers or third party administrators to ensure employees are engaged in their care management program.
Third, he said tools such as artificial intelligence will improve.
Fourth, he said the system must promote value-based care. For more than a decade, Blue Cross has worked on finding ways to pay for the patient experience and outcomes rather than paying on a per-service basis. Government action is also needed.
“It may be the most important dollars that we spend, but we need to spend it wisely, and we need to spend it in such a way that it has the greatest impact,” he said. “So what are we spending on prevention? What are we spending on primary care? What are we spending on mental health? And then how can we impact those other, more severe cases?”