Saturday, April 11, 2009

BCBS of Michigan to Cut Up to 1000 Jobs
AP Story Posted to

LANSING -- Blue Cross Blue Shield of Michigan said Friday it plans to eliminate up to 1,000 jobs and make other budget cuts this year in another blow to the state's economy.

The nonprofit health insurance giant said the moves are necessary to preserve its financial health. Blue Cross had hinted at possible layoffs last year after the Michigan Legislature did not pass changes to insurance rules sought by the company.

The job eliminations could affect more than 10 percent of the Blue Cross system's roughly 9,000 Michigan employees, including its subsidiaries.

Blue Cross Blue Shield employs 250 in its downtown Grand Rapids office.

Blue Cross has said it wants law changes because it is losing millions of dollars each year on health insurance policies that cover individuals.

Blue Cross customers also could feel the brunt of the company's actions. Blue Cross plans to request average rate increases of 55 percent for individual plans, 42 percent for group conversion plans and 32 percent for Medicare supplemental plans.

"We should not ask our individual subscribers to pay more without first demanding sacrifices from ourselves," Blue Cross Blue Shield of Michigan President and CEO Daniel Loepp said in a statement. "Our goal is to move forward as a strong and financially stable nonprofit company, committed to fulfilling our mission and delivering the best value in health insurance products and services to our customers."

Loepp said the company faces losses of $1 billion through 2011.

Blue Cross plans to trim 400 jobs from its core business and its Blue Care Network HMO subsidiary within the next 60 days. The other job cuts would come later in the year.

Some senior executives will face a salary reduction, the company said, while other executive pay will be frozen. Salaries of non-union employees will be frozen, and the United Auto Workers will be asked to delay a 3 percent pay increase planned for the Blue Cross employees it represents.

The company plans to reduce advertising and lobbying by 25 percent. Discretionary spending such as travel also will be cut by 25 percent.

Blue Cross is a nonprofit organization playing a unique role in the state's health care system. It can't deny any customer health insurance as long as the customer pays for it, making it the state's insurer of last resort.

In exchange for a mission of improving access to health care coverage, the nonprofit company is exempt from many state taxes.

The company's annual revenues were about $19 billion in 2007.

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