Sunday, March 23, 2008

Is New Blue Cross Plan Bad for Michigan?

Blue Cross / Blue Shield of Michigan is trying to push a controversial insurance bill through the Michigan state legislature. Michigan attorney general Mike Cox is adamantly opposed to the bill, and he recently wrote an editorial expressing his opinion and his reasons. Here is that editorial. Please take the time to weigh in on this serious topic — the new bill could adversely affect Michigan’s elderly population and hamper the efforts of Senior Care Providers, Assisted Living Facilities, Adult Foster Care Homes, and Nursing Homes, to keep their clients in good health.

Published January 13, 2008 [ From Ingham County Community News ]

Blue Cross plan is bad for Michigan

by Mike Cox — Attorney General for State of Michigan

Michigan citizens could see dramatic changes to their health insurance rates and coverage if the legislature approves a package of bills being pushed by Blue Cross. If signed into law, House bills 5282-5285 will cause subscribers, especially the old, sick and most vulnerable, to pay much more for coverage or lose their insurance altogether, while fattening Blue Cross’ already profitable bottom line.

The Blues were created in 1939 and given a social mission; specifically, to be the “insurer of last resort.” As a result, Blue Cross was also made tax-exempt. By their own admission, this tax-exempt status benefits the Blues by at least $82 million each year.

And Blue Cross has done well. Their share of the commercial health insurance market in Michigan is 70 percent. Their surplus has more than doubled in the last five years, to more than $2.8 billion, the highest in history. Blue Cross makes more than a million dollars a day in profits.

Salaries are on the rise, too. According to data filed with state regulators, Blue Cross paid its top ten officers $11.5 million in salary and compensation in 2006 — that’s a 42 percent increase since just 2004.

Guess what else has been going up? Rates. Individuals seeking health insurance have seen their rates skyrocket by 79 percent since 2003. And for those folks who have converted from group policies, their insurance rates have shot up even more — a 92 percent increase since 2003.

Not surprisingly, these massive rate hikes mean that more and more Michigan citizens and families can’t afford insurance. The number of uninsured in Michigan has gone up 8 percent since 2001. And the number of people on Medicaid has ballooned by 38 percent in that same time period. The result: One out of every four Michigan citizens is either uninsured or on Medicaid.

But Blue Cross says that it is heading for a “death spiral.” So the Blues are pushing a package of bills that will do the following:

# Deny coverage of pre-existing conditions for 12 months, a doubling of denial time;

# Charge new customers with chronic diseases such as diabetes up to 80% more;

# Charge new customers with serious illnesses such as cancer up to 250% more;

# Enable the Blues to triple their margins for administrative expenses and profits; and

# Eliminate oversight by the Attorney General and the Governor’s Office of Financial and Insurance Services (OFIS).

Oversight is crucial. This year, Blue Cross sought a 50 percent hike on the premiums that seniors pay for Medigap insurance. I intervened, saving more than 215,000 Michigan seniors $97.5 million initially, and over $69 million per year after that.

These bills would also eliminate the Governor’s ability to provide oversight of rates, by eliminating the ability of the Commissioner of OFIS to set rates. As a result, all state oversight — the ability to intervene and fight for lower rates — for any of Blue Cross’s future rate hikes would, for all practical purposes, be wiped out.

These bills seriously jeopardize Blue Cross’ social mission to care for the oldest and sickest in Michigan, and they destroy the Attorney General’s mission to protect them. I call upon citizens to contact their state legislators and urge Blue Cross stay true to its traditional — and legally required — mission “to secure for al of the people of this state … the opportunity for access to health care services at a fair and reasonable price.”

Mike Cox is Michigan attorney general.

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