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Health care is too expensive. Here’s how we’re making it more affordable.

By Blue Cross NC | April 29, 2021 | Industry Perspectives, Transforming Healthcare

We hear you. Health care costs too much. And the COVID-19 pandemic has only made it worse.

The health care dollar figures that matter to most people aren’t the national statistics showing trillions in health care spending each year.1 The more important  issue is how much it costs for families to get the care they need. As these costs continue to rise, people are forced to make hard decisions – like rationing medication,2 delaying care or choosing between medicine and groceries.3

These are decisions North Carolinians shouldn’t have to make. That’s why the work Blue Cross and Blue Shield of North Carolina (Blue Cross NC) is doing to make care more affordable has never been more important.

Why Is Health Care So Expensive?

2020 was a year of record claims and medical expenses for Blue Cross NC members. Spending on medical bills rose from $7.3 billion in 2019 to an all-time high of $7.5 billion in 2020.4 In fact, December saw the highest medical costs for a single month in Blue Cross NC history.5 There are many factors driving these rising costs and why health care in general is more expensive than it should be:

Prescription Drug Costs: A major and consistent one is the cost of prescription drugs. Pharmaceutical costs account for nearly 25 percent of health care costs for our members each year, and these prices have been rising for decades.6 Take Humalog, a very common insulin, as an example. A one month supply cost $35 in 2001, but the people who need it now pay more than $275 on average – an increase of nearly 700 percent.7 As the prices of prescription and specialty drugs continue to increase, insurers and patients both end up paying more.

Inefficient Care: Another factor is that our health care system has been providing incentives for the wrong things. Health care in our country has historically relied on a fee-for-service model, meaning consumers pay for every consultation, test, procedure and pill regardless of the outcome. That system rewards the volume of health care provided and focuses on treating people only when they’re sick instead of helping people stay healthy.

Cost of Care: There’s also the fact that prices for individual health care services continue to rise. Over the past decade, the amount doctors and hospitals charge for their services has grown four times faster than wages and five times faster than income.8 This is simply not a sustainable trend.

Administrative Costs: Administrative costs are yet another piece of the puzzle. Uncoordinated care and inefficiencies across the system lead to billions of dollars in waste every year,9 which drives up the cost of monthly premiums, copays and out-of-pocket expenses for everyone.

To address these issues, we’re transforming health care in North Carolina to make it better, simpler and more affordable.

How We’re Making Care More Affordable

Reducing Premiums: Insurance premiums are a direct reflection of the cost of health care. As we push to make care more affordable, we are focused on passing those savings directly to our members. Blue Cross NC has been able to reduce premiums over the past three years, saving members a total of more than $1 billion since 2018.10

We did this by improving care quality and health outcomes, rewarding value over volume and taking steps to make our own operations more efficient. Although these savings are a move in the right direction, we know our work isn’t finished. There is plenty of progress still to be made in addressing the issues that drive up premiums and providing more equitable access for all.

Making Prescriptions More Affordable: We are working to ensure that members have access to the prescription drugs they need. Our Rx Savings Solutions® program scans for specific savings and helps members maximize prescription benefits. This saves our members an average of more than $1,500 per year.11 Making tools and technologies like these accessible is a key part of our work to tackle the drivers of higher drug prices.

Additionally, we negotiate with drug companies for rebates that we pass on to our members. Individuals can’t negotiate drug prices at the pharmacy counter, but Blue Cross NC works with a pharmacy benefit manager to lower these prices for all our members.

Paying for Value, Not Volume: Under our signature value-based care program, Blue Premier, Blue Cross NC is working together with doctors and hospitals on improving health outcomes and lowering costs. Eight of North Carolina’s largest health systems are currently part of Blue Premier, one of the most rapid and comprehensive moves to value in the nation, and the program generated an estimated $153 million in cost savings in its first year alone.12 Paying for outcomes instead of action is key to making health care more affordable, both now and for years to come.

We’re also working with independent practices to help them adopt value-based care models. Our Accelerate to Value program provides support to help smaller, independent primary care providers deal with financial challenges related to COVID-19. This commitment to community providers improves access to health care across the state and opens the door for these practices to join value-based care models in the future.

Bringing Transparency to Health Care Costs: Health care is one of the only things a consumer is asked to purchase without knowing what it will cost. Without that price transparency, consumers can’t make rational decisions about their care.  Blue Cross NC was among the first insurers in the nation to make the prices of hundreds of elective health care procedures public, available online through our Treatment Cost Estimator. The online tool allows members to compare the prices of common procedures based on their plan before they make important health care decisions. And even if you’re not a member, all North Carolinians can quickly search for common procedures like MRIs, knee replacements or mammograms and see how the cost compares between providers. In some cases, the costs of identical procedures – delivered at facilities within sight of each other – can vary by hundreds or even thousands of dollars.

Our SmartShopper® program actually pays members to shop and compare the costs of health care procedures at different facilities. Our members can earn up to $500 per procedure to choose lower-cost, high-quality options for common medical care. SmartShopper has helped employer-sponsored plans save more than $100 million over the past six years, and efforts like these are part of our strategy to make health care more affordable for all members.13

The Urgent Work Ahead to Transform Health Care

The past year has shown everyone just how essential access to quality, affordable health care really is. We’re working every day to fight rising costs and make health care better for our members and for everyone across our state. We’ve made a lot of progress over many years, but our work is far from complete.

At Blue Cross NC, we resolve to continue our efforts to transform health care. And we won’t stop until it’s better, simpler and more affordable for all.

[1] Centers for Medicare & Medicaid Services;

[2] American Diabetes Association;

[3] Consumer Reports;

[4] Blue Cross NC Internal Data (Accessed March 2021)

[5] Blue Cross NC Internal Data (Accessed March 2021)

[6] Blue Cross NC Internal Data (Accessed March 2021)

[7] American Journal of Managed Care, June 2019;

[8] National Association of Insurance Commissioners;

[9] JAMA;

[10] Blue Cross NC Internal Data (Accessed March 2021)

[11] Rx Savings Solutions Internal Data from February 2018 to August 2020

[12] Blue Cross NC Internal Data (Accessed August 2020)

[13] Blue Cross NC Internal SmartShopper 2019 Book of Business (Accessed 2020)