29 May 2009

Attorney General Protests Blue Cross Rate Hikes, Offers Own Plan

Story from the Detroit Free Press

Michigan Attorney General Mike Cox filed a petition Thursday to stop proposed individual rate hikes for more than 400,000 individual Blue Cross Blue Shield of Michigan customers.

"Blue Cross should stop putting profits over people and focus on its mission as the insurer of last resort," Cox said in a statement announcing the challenge.

Overall, average increases sought would be 56% for non-elderly people buying their own insurance; 42% for group conversion policyholders who purchase coverage they once had at work, and 31% for seniors with supplemental Medicare, also known as Medigap policies.

Michigan's Office of Financial and Insurance Regulation was to have ruled on the rate hikes by June 2. Now the office has 30 days from Thursday to hold the hearing.

Blue Cross has said it needs the rate hikes to offset mounting losses for its individual policies, to exceed $1 billion through 2011, according to Blue Cross estimates. It also is laying off or not filling 1,000 jobs, has frozen executive and board salaries and cut spending on advertising, lobbying and other expenses, the Detroit-based company has said.

In a statement, Blue Cross said that it would prefer not to raise rates but "unfortunately our broken regulatory system puts us in this uncomfortable position."

Cox has had mixed results with rate challenges.

He and Ann Arbor attorney Joe Aoun lost a challenge earlier this month of 2007 Blue Cross rate hikes for non-elderly people who buy their own Michigan health insurance. But Cox won a separate challenge in 2007 to raising Medigap rates.

Cox has issued his own 10-point plan to reform Michigan's health insurance industry. He said challenges like the one he filed Thursday will be reduced by proposals pending in the House.

Rep. Marc Corriveau, D-Northville, said he has tried unsuccessfully to work with Cox to frame the bills to retain his oversight. His proposals would allow the Attorney General to file a challenge to a rate hike, but would shorten the time he could do it.

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