Health Insurance
5:30 pm
Tue September 11, 2012

Proposal would change Blue Cross in Michigan

Update 5:30 p.m.

Governor Rick Snyder has proposed an overhaul of the rules covering Blue Cross-Blue Shield of Michigan. Blue Cross would have to pay taxes adding up to $100 million a year or more.

But the company could also make changes to its rates a lot more quickly and easily. That would help it compete for business.
    
Andy Hetzel is a vice president at Blue Cross. He says the new federal health care law is changing the insurance marketplace and Michigan needs to keep up.

“You have rules for certain insurance companies that other insurance companies don’t follow. You have taxes that are paid by some insurance companies and not paid for by others. You have this hodgepodge of regulation that, over time, has given Michigan one of the worst regulatory systems in the country," says Hetzel.

One of the biggest changes under the federal law is insurance companies can no longer reject applicants based on their health history. Right now, only Blue Cross is required to accept all applicants.
    
For-profit insurance companies say they want the overhaul to make it easier for them to challenge Blue Cross’s market dominance.

11:16 a.m.

Governor Rick Snyder announced today proposed changes to the Blue Cross Blue Shield of Michigan company. The changes would make BCBSM more like a traditional insurance company.

From Gov. Snyder's press release:

Gov. Rick Snyder today proposed sweeping changes to how Michigan’s largest health insurance provider is regulated, calling for it to become a nonprofit mutual insurance company that is regulated under the Michigan Insurance Code like all other health insurers in the state.

The governor’s plan requires Blue Cross Blue Shield of Michigan to contribute about $1.5 billion over 18 years to a new nonprofit entity whose purpose is to fund initiatives that foster healthier lifestyles, provide better access to health care and improve public health. This is an unprecedented investment in the health and wellness of Michigan families.


Their press released listed these specific proposed changes with BCBSM:

  • Create a nonprofit entity to improve the health of all Michigan residents. The nonprofit will be run by an independent board of directors. It will be funded with about $1.5 billion in contributions from Blue Cross made over the next 18 years.
  • Blue Cross will transition to a nonprofit mutual insurance company that will pay an estimated $100 million a year in additional tax revenue to the state and local governments.
  • Protect senior citizens by freezing “Medigap” coverage rates for four years.
  • Streamline the regulatory environment by regulating Blue Cross under the state Insurance Code, as is the case with all other health insurance companies.
  • Preserve Blue Cross’ nonprofit status and mission while maintaining its tremendous contribution to Michigan’s economy and investments in the state.
  • Eliminate the “tax” currently required on Blue Cross’ small-business and individual customers to subsidize other lines of insurance coverage. That tax costs small businesses and individual Blue Cross members more than $200 million a year.
  • Ensure that Blue Cross continues as a carrier of last resort until Jan. 1, 2014, at which time new federal laws will require all insurers to offer coverage to anyone regardless of health status.

MPRN's Rick Pluta is covering this story and will have more for us later today.