Retiring CareFirst CEO Chet Burrell discusses the future of health care and insurance

Chet Burrell came on as CEO of CareFirst BlueCross BlueShield as the health insurance company’s reputation suffered after previous leadership had attempted to turn it into a for-profit business.

During his nearly 11 years at the helm of the state’s largest insurer, Burrell has rebuilt trust in the company, significantly modernized its operations and ushered it through adoption of the Affordable Care Act.

As the 70-year-old prepares to retire at the end of the month, Burrell recently looked back on his time at the company and what he sees as the future for health care, including the industry moving closer to a public option — the creation of a government-run insurance company that would compete with private insurance.

Here are excerpts from the conversation:

Q: What do you think has changed most about the health insurance industry since you started?

A: I think the biggest single change has been the affect of the Affordable Care Act. We have been strong supporters of the Affordable Care Act because it gave people greater access to health care, particularly to people who were vulnerable, lower-income, sicker. They wouldn’t have had the access before. It didn’t get everything right, but it washed over the industry. It was the biggest single thing that happened to the commercial sector, including us. It rewrote the rule book on the business.

Q: Do you think the ACA will survive?

A: I actually do. It will be continually attacked, but I think the chance to kill it outright may be over after 50 or 60 attempts to do so in Congress. They didn’t succeed. And now what you have is a morphing of it, an evolution of it. I think there will be a greater flexibility on what states can do.

Q: What needs to be done to fix the ACA?

A: The first thing is to make premiums more affordable, which is what Maryland started to do with a reinsurance program. It takes the really high-cost claims and protects against them. It’s a way of not placing them in premium and therefore the premium can be lower. If the federal government approves it, we could see reinsurance protection in Maryland lowering costs from what the other premiums would have been by 20 to 30 percent. That would be a very big deal.

Q: Should all states do this?

A: Yes, I think all states should do it, but the real party that could influence this and do it on a national scale is the federal government.

Q: The federal government had a reinsurance program.

A: They did and they couldn’t get it through. The main reason they couldn’t get it through is because of the philosophical difference on whether abortion should be covered or not. It had nothing to do with reinsurance. So hopefully in the future that single issue does not hang it up again. One additional thing they would have to consider is the amount of cost-sharing, out-of-pocket expenses and deductibles and co-pays. It is too high if you are not heavily subsidized. I think that would need to be fixed.

Also the climate may change. There will be a lot more discussion about public option. People will not want to give up coverage. There will be a political demand for coverage. The result of that will be putting things back on the table that were taken off, like a public option. If you think about Medicare, Medicaid, CHIP, the VA system and even the exchanges where people are heavily subsidized, there is a very big piece of the American population that is already covered by government programs. If you understand it in that context you can see that the thrust is toward greater coverage for all.

Q: Do you think it could happen in 10 years? In 20 years?

A: I think that it would be my wish that it would.

Q: Why?

A: I think as a right of citizenship and certainly as a right of legal residency and citizenship, you should have coverage. And then when you get it you feel as if it covers you for what you need. Not to be full of surprises and traps so that you didn’t realize you weren’t covered for something.

Now going against everything I just said, this is very worrisome. Because of the recent major tax cut, the government is running massive deficits. If the country has set itself on course to have massive deficits, at a time of great need, where do the cuts come? Would we cut defense? Would we cut social safety net programs? We are on a course that is unsustainable, in my opinion. At the same time we are on a course to give people better health coverage through these various programs. The threat is they’re not sustainable if they had these massive cuts.

And then I would add one other thing. If one were to ask what could you do that is most effective in controlling health care costs, there would be a cluster of things that you would do and they’re all free. Change diet. Exercise more. Reduce obesity. And you would avoid a lot of expense.

Q: What can insurers do to bring down premiums?

A: We have done many things. We have encouraged people in our patient-centered medical home to get coordinated care. A lot of program elements that we have put in place are designed to keep people stable at home. Create the opportunity for fewer breakdowns, readmission to the hospital or ER visits. We have many different programs to do that.

We have the largest contracted network of providers so that when you go to get care it is 98 percent certain you’ll go to a provider we have a contract with, which normally saves probably 50 percent of the costs right off the bat because we have lower reimbursement rates than if you were to pay it yourself. The other thing is we operate on tiny margins because we are nonprofit. You can’t lose money or you’ll put yourself out of business, but do it with the skinniest margin possible.

Q: Do you think high-deductible plans could cause people not to get care and how do we get around that?

A: Yes. We are worried about high deductibles. We think what happens is people with high-deductible plans tend to defer care that may lead to further breakdowns down the line. People choose them because of the high cost of premiums, not because they like them. A lot of people choose out of necessity. Our worry is long-term, it discourages this access. And that is not cost effective in the long-term.

Q: What do you think an ideal health system would look like?

A: A complete benefit coverage. It covers a reasonable amount — I would say 80 percent or more. Allows freedom of choice. And is not complex administratively for the person involved. Match that with a greater emphasis on primary care so that everybody has a primary care physician. And the primary care physician is incentivized to get the best outcomes from you and know you the best. Closely connected to that theme is community based in-home care. Not so much emphasis on hospital-centric everything. And then one final one, which is subsidies for low income and less subsidy for higher incomes. In other words, means testing. Those with greater means pay the full boat and it goes down as means decline to the point where you get subsidy.

Q: And that would be a public plan?

A: One could argue that that could be.

Q: It sounds a lot like what we are doing but in scattered pieces?

A: Short of a crisis of funding, where the deficits overtake the country, we are congealing gradually into something that I just described.

Q: What do you think your biggest accomplishment was?

A: I don’t think it was on any one thing. I put focus on I would say two or three key areas. One, the company when I got here was antiquated. It had old systems. It was not operating as efficiently as it could. So what we did was modernize our own house. We didn’t do that much at the time by way of online anything. Now everything is mobile-based and online. A second area was how would you approach better cost controls of health care. What contribution could we make? And not just to cost, but to quality. A third is to look more at medical innovation. So we have put more emphasis on what are the latest technologies in medicines, diagnostic tests, new treatments, new devices.

Q: Why retire now?

A: It’s not that I’m tired. I’m not at all. There is a desire to say let’s do some other things while we still can.

Q: It’s not because you’re disappointed with the way the industry is going?

A: No, it isn’t that. It is the chance to do something different. To pursue other interests that I can’t pursue when I am intensely engaged here. But it is also a chance to rebalance my life, have more time with family and grandchildren. And not feel regret later that you were so busy doing what you were doing that they grew up and you never really had enough time. We want to travel more. We want to do the things that you get to do when you are a little freer.

Q: What are you going to do?

A: Well, there are a couple of things that are known already. My son has led an effort to start two medical schools and I am on the board of those medical schools. One is the Burrell College of Osteopathic Medicine and the other is the Idaho College of Osteopathic Medicine. One is in Idaho outside of Boise. The other one is in Las Cruces, N.M. Both are in medically underserved areas. Both are dedicated to graduating primary care physicians. That is near and dear to my heart. I will become deeper involved in the efforts to further the interests of those schools and medical education. The other is in private equity investment in promising new health technologies. Where I have time to more systemically assess them, work with others who do provide the capital, and foster new innovations in treatment and diagnosis treatment kinds of things.

Q: So you’re not really retiring?

A: It is a smorgasbord of interests. But what it is not is running a multi-billion dollar company day-to-day, which is the equivalent of having a bright light in your face all the time. And this gives a little more freedom and maybe even a little more time to think and to choose and to get perspective. I don’t want to go home and sit on my porch and rock. That is not the goal. I’m not tired. I am very healthy. It’s just a feeling that it’s time

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