Why some seniors are sick over Blue Cross overhaul

Dec 7, 2012

A lot of Michigan seniors are not happy with some of the proposed changes to Blue Cross Blue Shield of Michigan.

The legislature is overhauling Blue Cross, changing it from a charity to a state-tax paying business.

But some seniors say it could make their healthcare bills skyrocket, or even take away some of their health insurance plans all together.

Now, if your brain is starting to hurt at this point, don’t worry:  contrary to popular belief, you do not have to be a rocket scientist to understand this healthcare change stuff. Promise.

Here’s all you need to know:

1)      Blue Cross Blue Shield is huge in Michigan. Some 70% of Michiganders have Blue Cross. In other words: we all have skin in this game.

2)      Blue Cross Blue Shield is currently Michigan’s (say it with me now!) insurer of last resort. That means they have to insure everybody, regardless of your prior health problems or how much you can pay. In return, they don’t have to pay state taxes.  

3)      Blue Cross leaders says, look, once Obamacare’s health insurance marketplace take effect, we need to put our products on that exchange in a timely manner – so this 11 month waiting period for rate hikes that Michigan makes us go through now? Scratch that. In fact, Blue Cross leaders say, we would rather pay taxes to the state and lose some of these pesky regulations that Michigan’s lawmakers have saddled us with.

Got it? Because this is when people like Gloria Kovnut start to get worried.

Sitting in the pristine kitchen of her Grand Ledge condo, Gloria taps her red nails on the insurance paperwork spread across the dining room table. She delivers her family’s health history with no-pity-please directness: "I'm 69, and I'm a breast cancer survivor." And your husband? "My husband is Lewis Kovnut, we call him Sonny. He's 77, and he's a prostate cancer survivor, open heart surgery survivor, and stroke survivor."

Gloria's originally from Philadelphia, and she’s still got traces of a brassy East Coast accent. She cooks healthy for her and Sonny, and they go on a lot of walks to stay slim. “We eat well, we cook, we walk, we exercise – and we laugh!”

And they love their health insurance. Really, really love their health insurance. It's called Medigap.

Medigap is a plan Blue Cross offers on top of Medicare - you know, that plan that seniors and many disabled people have.

And here's why Gloria loves Medigap: it pays for everything. Ok, not literally, but pretty much all your out-of-pocket expenses a senior is going to rack up: your specialists, home health care, emergency care, nursing, hospital visits. Medigap covers every penny. Which, in Gloria's case, would be a lot.

"If you have cancer, you're going to see a lot of specialists. So this is going to be very costly for people."

Without Medigap, Gloria and Sonny could each pay up to $7,000 a year, just for the out of pocket costs Medicare doesn't cover.

Asked if she thought Medigap sounded too good to be true, Gloria nods. “Oh yeah! It was fabulous. Just fabulous.”

Turns out, it is too good to be true – or at least, too good to last. You probably saw this coming, but it turns out Blue Cross loses a ton of money on Medigap: something like $88 million a year.

And under proposed changes in the legislature, Blue Cross could get rid of Medigap within 4-9 years, depending on which timeline passes in the statehouse. At that point, Blue Cross could just say, nah, we're not gonna offer it anymore.

Which could leave people like Gloria paying big costs. That’s what senior advocates are worried about. Mary Ablan is the executive director of Michigan’s Area Agencies on Aging.   

"There are lot of people who can't afford that. Half of the seniors in Michigan are living at 200% of poverty or less."

Ablan says once Blue Cross can just get rid of that insurance all together, seniors are gonna feel the crunch. "Their other options will be to spend a lot of money out of pocket, and spend down their income and their assets and go on Medicaid."

But there's another way to see this: currently, Medigap covers only 210,000 people in Michigan. Meanwhile, it’s costing Blue Cross so much, they have to pass those costs off to their other customers. Andy Hetzel is VP of corporate communications for Blue Cross of Michigan.

"Most of that customer impact is felt with the smallest businesses in Michigan, who are also trying to afford health insurance and provide jobs for people."  

Hetzel says yes, it is great that Medigap covers specialists and ambulances and all those out of pocket costs for seniors.

But he says even if Medigap does go away – which, he points out, is not a certainty -  seniors  still have options. They could get another Medicare plan. It might not cover all those out-of-pocket bills, but it'll come with lower premiums. And he says when you look at the numbers, that's just a better option.  

"Those plans have twice as many seniors enrolled in them than Medigap does. Which is evidence that the marketplace is providing better coverage for older adults."

For Gloria, the breast cancer survivor, she says losing Medigap probably wouldn't bankrupt her and Sonny.

But she says it would hurt, especially trying to get affordable care with all their pre-existing conditions. She says Sonny's talked about throwing in the towel on the whole health insurance mess. 

"He won't pay. He'd rather go without it and not go. I mean, that's his philosophy. Because it wouldn't be fair. He's paid in all his life, and now when he needs it it's not there." 

These big changes to healthcare are moving through the legislature right now. They're expected to be finalized before Christmas.