Blue Cross Backs Down - And What the California Legislature Can Do Now

[courtesy of California Progress Report]

By David Dayen
d-day

Facing a torrent of criticism Tuesday, Blue Cross of California abruptly halted its practice of asking physicians in a letter to look for medical conditions that could be used to cancel patients' insurance coverage.

In a statement issued about 6 p.m., the state's largest for-profit insurer said, "Today we reached out to our provider partners and California regulators and determined this letter is no longer necessary and, in fact, was creating a misimpression and causing some members and providers undue concern.

"As a result, we are discontinuing the dissemination of this letter going forward."

The Los Angeles Times occasionally earns its moniker of the Los Angeles Dog Trainer, but they have covered the many Blue Cross issues with a great deal of honor and professionalism. And they can be proud of the results.

Meanwhile, as comprehensive health care reform goes out the window in California for the coming year, Ezra Klein has a couple ideas about how to make the current private insurance system work a little better. He's right that making insurers compete to offer better care is actually counter-productive, because the costs incurred would outweigh the new memberships. But government can play a role to force insurers to compete in ways positive to both their bottom line and the welfare of their consumers, through some mandated steps:

Universality: Insurers cannot compete effectively unless everyone is in the pool. If the healthy can leave, insurers cannot compete to offer better care. They'll have to compete to attract the healthiest, which means offering the lowest costs, which means insuring the fewest sick people. The system has to be universal.