Executives at Blue Cross and Blue Shield of Michigan are facing off with consumer groups and competitors over the rules governing Michigan’s individual health insurance market.
Michigan gives Michigan Blue, Detroit, state and local tax exemptions that were worth about $80 million in 2007 in exchange for requiring the nonprofit carrier to serve as an insurer of last resort for individuals with health problems.
Michigan Blue expects to lose $166 million on individual lines this year and $264 million in 2009, and those losses are causing a drop in the company’s risk-based capital ratio, the company says.
Michigan Blue’s RBC could fall to 450% in 2011, from 627% this year, the company says.
Michigan Blue is asking state lawmakers to pass drafts of H.B. 5282 and H.B. 5283 introduced by Rep. Marc Corriveau, D-Northville, Mich., that would permit Michigan Blue to increase individual rates 40% and Medicare Supplement rates 75% without getting permission from state regulators.
The bills also would allow Michigan Blue to charge some seniors and individuals with disabilities rates up to 3 times as high as the rates it charges other individuals.
Another provision would require other health plans in the state to help cover high-risk individuals by funding a risk pool program or paying an assessment that would subsidize Michigan Blue’s individual health insurance operations.
A conference committee has been ironing out separate versions of the bills passed by the Michigan House and the Michigan Senate.
If lawmakers reject the compromise version of the bills and the current rules prevail, “uncontrollable financial losses on individual policies will escalate and lead to [Michigan Blue's] entire business becoming financially unstable in the near future,” the company says in a statement.
Opponents of the bills say they are trying to keep Michigan Blue from jamming conference versions of the bills through the state Legislature during a lame-duck session.
One group that opposes the bills, the Michigan Disability Rights Coalition, East Lansing, notes that Michigan Blue’s surplus has increased to $2.9 billion, from $1.3 billion, over the past decade, and that the company estimates it earned a total profit of $212 million during the first 3 quarters of 2008.
The coalition says any losses at Michigan Blue are due to Michigan Blue management decisions, not to any state policy.