Individual reform debate heats up in Michigan

Blue Cross Blue Shield of Michigan (BCBSM) announced a series of actions in January to preserve its financial health, including eliminating jobs, raising rates and reducing investments. BCBSM hopes to offset projected losses on its individual health plans, which could exceed $1 billion from 2009 through 2011.

“BCBSM now has an obligation to make hard business decisions to sustain Blue Cross financially as we wait for the Michigan legislature to find the will to create a modern, fair and sustainable regulatory structure like most other states have accomplished,” says BCBSM spokeswoman Helen Stojic.

“All of our actions are to preserve the financial health and stability of the Michigan Blues,” Stojic says. “They are unfortunate, particularly given the state’s economy, but they are the direct and predictable result of a regulatory system that no longer works. Until policy makers reform Michigan’s broken individual health market, Blue Cross will do what is necessary as a private business to preserve our financial stability. In 2009, this means raising rates, cutting costs and reducing our investments in local communities.”

“State law requires our individual products to be financially sustainable, but we will lose hundreds of millions on them this year,” Stojic says. “Absent regulatory reform, we must turn to the rate-setting process for relief, and we must get new pricing soon.”

Blue Cross Blue Shield Michigan is confronting the same problems many Blues are facing, according to Steve Mitchell, president of Mitchell Research and Communications Inc., and a spokesperson for the healthcare-coalition Put Michigan People First (PMPF).

“Just as other companies have done, BCBSM has to reduce costs,” he says. “However, other companies have not gone to the legislature to ask for a bailout. The Blues in Michigan already receive tax exemptions worth more than $100 million a year to perform its social function of being insurer of last resort. Its request for huge rate increases must be thoroughly examined.”

Stojic says contributions BCBSM makes to the people of Michigan in social mission funding are nearly five times the value of the tax exemption. “This is not a bailout-no one is giving us money,” she says. “This is about reforming a 30-year-old law so the cherry-picking of sicker individuals does not continue unabated by the for-profit insurers.”

The Blues were unable to influence the passage of legislation in recent years because it failed to compromise with key stakeholders, according to Mitchell. A broad-based coalition of consumers, unions, the Attorney General, and other carriers all opposed the Blues bills because they believed they would not have provided more access in the individual market.

The broad-based coalition that fought the Blues last year has been expanded and is working to structure a legislative proposal that will be “fair, comprehensive, and that will provide affordability and access to the individual market,” according to Mitchell. It will also address the concerns and needs of BCBSM, he says

“In order to accomplish that mission, the legislative process must be open, public and transparent,” he says. “Michigan needs to pass legislation that will assure all its residents have access to affordable healthcare coverage. The individual market is a part of the reform that the legislature should be debating.”