Michigan Governor Gets Small-Group Reform Bills

NU Online News Service, June 26, 2003, 5:50 p.m. EDT – Michigan Gov. Jennifer Granholm is considering two bills, S.B. 234 and S.B. 460, that would restrict commercial health insurers’ ability to adjust rates for small employer groups but give Blue Cross and Blue Shield of Michigan, Detroit, more flexibility in adjusting small-group rates and in running its business.

Today, Michigan lets commercial carriers ask for high rates from small employers that appear to be bad risks, according to an analysis prepared by the Small Business Association of Michigan, Lansing, Mich.

Michigan prohibits Michigan Blue, a nonprofit health care corporation, from taking age, medical condition, claims experience and other case characteristics into account when it sets its small-group rates.

If Granholm signs S.B. 460, the main small-group reform bill, which was introduced by Sen. Bruce Patterson, R-Canton, Mich., the state eventually will limit commercial carriers to charging groups with fewer than 50 employees rates that are within 45% of the standard, index rate. The state will let Michigan Blue charge small groups rates that are as much as 35% higher or lower than the standard rate. Health plans could charge extra for sole proprietorships and for small employers that are converting to insured plans from self-insured plans.

If Granholm signs S.B. 234, the bill that eases restrictions on Michigan Blue, which was introduced by Sen. Beverly Hammerstrom, R-Temperance, Mich., the state will change the rules that govern Michigan Blue’s surplus; let carriers reject some employers with fewer than 100 employees that fail to persuade a minimum percentage of employees to sign up for health coverage; and help Michigan Blue enter the long term care insurance market.

The small-group rate provisions would take full effect in 2006