Fact Check

Claim:

Health Care Service Corporation (HCSC) is the parent company of Blue Cross and Blue Shield of Illinois.

Fact:

The term parent company applies only to the relationship with subsidiaries, not the Blue Cross and Blue Shield plans, which are divisions of HCSC. The plans are not their own entities. A correct way to phrase this relationship would be, “Health Care Service Corporation operates Blue Cross and Blue Shield of Illinois.”

Claim:

Health Care Services Corporation is another name for our company.

Fact:

The only name of our company is Health Care Service Corporation, or HCSC. The name of our company is often published incorrectly. The word "Service" is always singular in the name of the corporation.

Claim:

Health insurers are to blame for rising health care costs.

Fact:

Health insurance premiums are a direct reflection of the cost of medical care. As doctors and hospitals increase the amount of money they charge for medical procedures, insurers increase premiums to pay for member expenses. Also, the federal government limits the amount of money insurers can spend on administrative costs. Additionally, HCSC’s profit margin was less than 2 percent in 2009 and is expected to be between 1 and 2 percent in 2010 — which is lower than many other health-sector companies.

Claim:

Health insurance executives get paid too much money.

Fact:

For every dollar we receive in revenue, approximately one-tenth of one penny goes to executive compensation. As a result of our size and business complexity, we compete for talent with some of the largest companies in the country. Our compensation program must attract and keep the top talent required to manage the complexities of the nation’s fourth-largest health insurer operating in four states in addition to its large non-health insurance and information technology subsidiaries operating nationwide. Executive compensation at HCSC is determined by our independent board of directors with the guidance of expert outside advisors. They base their decisions on agreed-upon performance standards and market-competitiveness.

Claim:

Twenty percent of health insurance claims are processed inaccurately, wasting billions of dollars in the health care sector.

Fact:

Each year, HCSC goes through dozens of comprehensive, independent, third-party audits of the accuracy and timeliness of our claims administration. These audits show that we process claims accurately 99 percent of the time. We are pleased that our efforts have resulted in some of the most positive results in the industry.

Claim:

Health insurers cancel policies when people get sick.

Fact:

Since 1996, federal law has prohibited insurers from dropping people when they get sick (HIPAA, 1996). Insurers are required by federal and state laws to issue coverage on a “guaranteed renewable” basis – meaning the decision to renew is made by the individual and not the insurer. The only reason a policy may be cancelled is if a person is found to have lied or presented fraudulent information on his or her policy application. (Modified from BCBSA Materials, 9/2009)

Claim:

Health insurers raise premiums when someone becomes sick.

Fact:

Federal and state laws prevent employers or health insurers from charging an employee in a group health plan a higher premium based on their health or claims status. Premiums paid in the individual market are subject to significant state regulation. Individuals generally cannot be singled out for rate increases based on their health status once they obtain insurance.

Claim:

Health insurers discriminate against people with pre-existing conditions.

Fact:

Federal and state laws have allowed insurers to deny coverage to people with pre-existing conditions. This has been necessary to ensure that people do not wait to buy coverage until they are sick, which would then raise premiums for everyone else. With the Patient Protection and Affordable Care Act, effective Sept. 23, 2010, insurers must accept all applicants under age 19 regardless of pre-existing conditions; effective 2014, insurers must accept all other applicants regardless of pre-existing conditions, and all individuals must purchase health insurance.

Claim:

There’s inadequate competition in the insurance market.

Fact:

There is significant competition in local health insurance markets. There is a median of 27 carriers serving the small group market in each state. (Modified from BCBSA Materials, 9/2009)