An ongoing contract standoff between Allegiance Health and Blue Cross Blue Shield of Michigan is worth public attention for two reasons: 1. It will affect health premiums for local Blue Cross customers, and 2. It may affect the independence of this Jackson-run hospital.
The price of insurance matters more today. The ability of Allegiance to survive on its own could matter more in the long run.
Allegiance officials are going unusually public in their negotiations with Blue Cross, by far the largest insurer of their patients. The hospital contends that Blue Cross has not paid a fair share for medical procedures for years — $10 millions annually, it says — and that the insurer is offering too small of an increase in payments.This month, the hospital asked local businesses to urge Blue Cross to compromise, to give Allegiance a better deal. In response, Blue Cross officials say they are being fair, that what they pay the Jackson hospital is comparable to others in the region.
Which side is right? We can’t say. No one can, unless they have access to financial documents for both organizations.
What is clear is that the stakes in this showdown are high. The worst case for patients is that Allegiance would stop accepting Blue Cross. More likely is that this will add to the decade-long climb in the cost of local health care. Any agreements to pay Allegiance more ultimately will translate into higher health-insurance premiums.
It is difficult to argue for any scenario in which employers pay more, but increasing Blue Cross payments to Allegiance presumably offers some real value. It could ensure the financial health of the hospital, which already operates on a slim profit margin.
Allegiance is more than a local institution. It is Jackson County’s largest employer, and it has shown a willingness to invest in this community. We do not imagine the same level of commitment from an outside organization.
We worry that Blue Cross is playing tougher with Allegiance because it is comparatively small. It holds much more leverage with this hospital than with, say, the University of Michigan Hospital. At the same time, Blue Cross must also protect its bottom line to compete in the private insurance market.
The best anyone can hope for in this stalemate is a solution that keeps Blue Cross and Allegiance working together in mutual self-interest. A new contract must provide the insurer with a reasonable reimbursement rate, and the hospital with the fair payment structure that it needs to survive Issue
Allegiance Health and Blue Cross Blue Shield engage in difficult contract talks.
Our Say
A resolution is important to the community, considering the cost of medical care and preserving a locally owned hospital.
