Humana’s CEO On Health Care Reform – Narrow Networks, Less Choice

“Most of our products are going to be narrow networks and limited providers because we feel that is the best way we can offer a product that is going to be cost-effective.”

By Caroline Humer

(Reuters) – Bruce Broussard took over as chief executive of Humana Inc in January, just in time to steer the health insurer’s entry onto the health insurance exchanges created by President Barack Obama’s reform law.

Humana plans to sell subsidized insurance plans in 14 states, including Arizona, Colorado, Florida and Kentucky, where it is based, about the same number of states as rivals like WellPoint Inc and Aetna Inc.

The exchanges are expected to bring in 7 million people in 2014. Insurers must offer plans to any individual who applies, regardless of prior health problems. The government will provide subsidies to people who earn up to 400 percent of the federal poverty level, or $94,200 for a family of four.

Humana already has experience with government healthcare programs – it has more than 2.5 million members in privately administered Medicare Advantage plans for the elderly. It also manages Medicare pharmacy benefits for more than 3 million people.

Here is a discussion that Reuters had with Broussard this week on the effort to roll out “Obamacare”:

Q: What has proven harder than you thought about the development of the exchanges?

A: This is a massive project. A number of months ago the industry met with the president and he made the comment this is probably the largest healthcare project since the Truman-Kennedy era, and he is right. We are taking on a very, very large project and so there are a lot of details that the states and the federal government are working on. It’s keeping up with those and being able to implement them where they are already behind schedule, and trying to keep up so that we do fulfill the needs of the public promise that has been made.

Our challenge right now is it is moving so quickly, keeping up with it and being able to assist the state and federal governments for it to be successful because I think the last thing we want is for it not to be successful. So we are dedicated to helping it. But the details are coming out and they are coming out as quickly as the federal government can get them out.

Q: What did you think about the recent U.S. Government Accountability Office report that said some states are behind?

A: I’m not going to take a different stance than the GAO. I’ll just say in general there are a lot of details and everyone is working hard to get this done. The industry is working hard, the states are working hard, the federal government is working hard, but this is a big task that’s been taken on and I’m sure details will be get lost in the process just because of the size and the enormous effort that is required here.

Q: When consumers decide on which plan to purchase, would you expect that access to certain doctors and hospitals will play a large role?

A: It’s going to be interesting. This is where price and choice are going to come at a crossroads here. I think a more cost-effective product is going to have less choice. It is a test. Most of our products are going to be narrow networks and limited providers because we feel that is the best way we can offer a product that is going to be cost-effective.

Q: How else can consumers judge the value of these products?

A: This isn’t much different from (Medicare) Part D and Medicare Advantage when it came out in 2005. There was a lot of confusion around what it meant and there was a lot of time being spent on educating both around choices and options and subsidies to the type of plan.

As we look over the coming number of months, we look at that as a responsibility that we have in educating in the 14 states we will be in. We are going to take our market point sales group that today also handles the Medicare Advantage program, we are going to expand that and they will be an active part of the individual exchange. So we are going to have people on the ground helping people.

We also believe in having relationships where people are in their normal course of life, so retail chains are an important part of that. So not only are we going to have people go to their homes, but in addition we are working with partners with retail outlets so we can staff individuals where it is convenient to a potential member to incorporate in their life.

Q: Do you mean grocery stores and pharmacies?

A: Yes, that’s right.

(Reporting by Caroline Humer; Editing by Michele Gershberg and Douglas Royalty)