Critics may derail fast track for Blue Cross Blue Shield reform

Article first appeared on The Detroit News


Gov. Rick Snyder wants the Legislature to quickly pass Blue Cross Blue Shield reforms, but some critics are demanding a second look that might delay passage and keep the Blues from offering low-cost insurance under the federal health care act.

The Legislature approved a two-bill package in late December. But Snyder vetoed the legislation earlier this month over anti-abortion provisions added minutes before passage in the lame-duck session. The provisions required women to buy separate, elective abortion coverage.

The bills were reintroduced in the Senate on Wednesday without the added language and are likely to breeze through the Senate. It could be tougher in the House, which has more than two dozen new representatives and has yet to make committee assignments.

"We have 26 new people so we can't do a quick thing like the Senate," said Rep. Pete Lund, R-Shelby Township, who last year chaired the House Insurance Committee. The number of Democrats also has increased in the lower chamber, where the GOP has a smaller 59-51 majority.

House Minority Leader Tim Greimel, D-Auburn Hills, said his caucus' concerns include getting continuation of Medigap subsidies for seniors extended beyond the four years in the bills.

"We're interested in making sure that seniors are protected from any unduly high premiums in their Medigap insurance," Greimel said.

Snyder supported turning the Blues into a taxpaying nonprofit mutual insurance company to streamline the rate approval process and increase competition among insurers. Blue Cross dominates with more than 70 percent of the market. The Blues also support the reforms.

But critics contend the proposal does little to inject more competition and would make it easier for the Blues to raise rates for consumers -- meaning little if any money would be saved.

Among the legislation's biggest critics is Attorney General Bill Schuette, who argues the prior legislation failed to protect consumers. The Legislature ignored Schuette's early calls for an independent valuation of the Blues' assets to determine the nonprofit's worth before entering into a deal.

The legislation requires the Blues to contribute $1.5 billion to an independent foundation to carry on their charitable mission, but Schuette questioned if it is a good deal for taxpayers.

Future of Medigap subsidies:

Schuette also fears that seniors would not have the cost of Medigap, secondary insurance to cover costs not paid by Medicare, subsidized beyond 2016.

"The attorney general negotiated a historic Medigap rate freeze, and this legislation does not address what happens when that expires, (when) thousands of seniors could face rate increases of up to 66 percent," Schuette spokeswoman Joy Yearout said.

Blue Cross spokesman Andrew Hetzel counters the legislation guarantees Michigan's lowest-income seniors will continue to get Medigap subsidies for nearly a decade.

"We believe that the legislation provides extraordinary protection for seniors," Hetzel said. "It guarantees not one penny of rate increase in our Medigap product for four more years, and after that the legislation calls for continued subsidy for Medigap for five more years for the lowest-income seniors."

Schuette and at least one business group also worry that the proposal diminishes the attorney general's role to intervene on behalf of taxpayers. Although Michigan is rated the third least competitive state in the nation for health insurance by the American Medical Association, the Blues would receive no more scrutiny than any other insurer.

"If (the attorney general's) oversight is removed," Yearout said, "seniors would no longer have an advocate to keep these rates down."

Still, the legislation Snyder vetoed had important new rules for the insurance industry, said Rick Murdock, executive director of the Michigan Association of Health Plans that represents non-Blues insurers.

They included a prohibition against an insurer contracting with a health system to give it a lower cost that couldn't be offered to another system, and ensuring the Blues pay their fair share of Medicare and Medicaid costs, he said.

If those provisions are kept in the new bills, Murdock would rather get them approved and worry about other changes later.

Leveling the playing field

Though the Blues package, without the abortion language, had bipartisan support, it was opposed by consumers' groups supported by many Democrats, as well as by some business groups.

"I think we'd like to revisit some of these issues," said Charlie Owens, state director of the National Federation of Independent Businesses.

As the state's insurer of last resort, the Blues for decades promised to insure everyone regardless of pre-existing conditions. In return, they've been forgiven roughly $100 million annually in tax payments. But under the federal Affordable Care Act, all health insurers have to insure such patients, so Snyder proposed it lose its special status.

The Blues agreed and want to compete on a level playing field when consumers start purchasing low-cost health insurance on the Michigan Affordable Health Care Exchange on Jan. 1, 2014. Hetzel said it will take about one year from the time the Blues bills are signed into law to complete the transition to a nonprofit mutual insurance company, so the Legislature would have to act now to ensure the Blues are ready at the starting gate, he said.

Time crunch for approval

The first hurdle comes March 31 when all of the state's insurers who wish to participate in the health care exchange must file a description of their products and prices with the federal government. The products have to be approved by the state insurance commissioner under existing rules. That means some products or prices might not get approval by the end of March.

If the Legislature hasn't passed the Blues legislation, "that puts Blue Cross at the huge disadvantage and it puts the insurance commissioner in a very difficult spot," Hetzel said.

State Insurance Commissioner Kevin Clinton agrees there is cause for concern, especially the lengthy eight- to nine-month process the Blues go through to get rates approved.

"They're going to be under a time crunch unless they can come up with a way to have their rates approved faster than they've done in the past," Clinton said. "Certainly you want your state's largest insurer to be on the exchange."

Questionable Future for State Health Plans

Many individuals are embracing the summer season with fear. A Washington state health insurance program for low-income adults is planning to close, ending insurance coverage for about 65,000 individuals.

The ill economy is forcing Washington state as well as many other states to shave their health insurance programs for low-income people, even as jobless motives are demanding help. Five of the six states that

utilize state funds to help adults who are not covered by Medicaid are considering cuts. These program cuts are barring new enrollment or raising fees.

The 250,000 individuals taking advantage of the state programs are adults who do not qualify for the federal-state Medicaid program. This is either because they have no children or have earnings exceeding the limits which state imposes on Medicaid eligibility. The number of adults represent a small fraction of those who get government health insurance coverage, even though the state programs are often their only option for health coverage.

Individuals are taking action to counter the state's insurance cuts. For example, in California, many are consulting insurance brokers for Medigap insurance quotes to fill the coverage gaps of Medicare. This type of plan is also known as supplemental insurance.

The U.S. Senate passed a health bill that does include funding for the state programs. That bill, along with a bill the House of Representatives passed, would also expand Medicaid and provide federal subsidies to help low-income and middle-income Americans acquire affordable insurance. The bill's fate is uncertain as Democrats regroup after a recent loss in a key Senate seat.

Even if the bill is approved, the relief for states, as well as the uninsured population, is years away. For this reason, experts are advising the uninsured to be prepared and obtain personal health insurance quotes from several insurance providers.

Potential Stimulus Protection

Stimulus money from the Federal government has sheltered many state Medicaid programs. However that funding is set to run out in December and could result in Medicaid eligibility cuts, on top of potential cuts in states' adult health programs.

A Washington senator added a provision to the Senate health bill to permit a state to find federal funds for Basic Health until 2014. The senators spokesman says the provision would apply to other states with basic health insurance plans.

A second Cantwell amendment would allow states to form basic health insurance plans after 2014. These plans would be available to individuals who earn over the limit for Medicaid but less than twice the poverty level.

Many insurance experts say such state insurance plans would not be needed if a healthcare overhaul passes. This is because most individuals who qualify would suit the new Medicaid enrollment guidelines or qualify for federal subsidies.

"There will be no reason for states to pay for this themselves," says an expert at the Urban Institute.

However, an overhaul is still up in the air. Until then, policy experts recommend shopping for individual health insurance with the best benefits.

Whatever the outcome of the debate at the capital, policy experts cross their fingers that lawmakers can seek the money to save Basic Health.

For more information on how to protect yourself with affordable, health insurance coverage, consult a policy expert to better understand your insurance options.

Medigap Info Could Overwhelm

Blue Cross denies hiding its money-losing policy
Detroit Free Press

John and Rita Cox had to find another Medicare policy this fall after Blue Cross Blue Shield of Michigan eliminated their plan.

They wanted a Blue Cross Medigap plan for $112.12 a month each, just like Rita's cousin has. An independent insurance agent at the insurer's Southfield lobby gave them an application in October.

But back home, Cox, 81, a retired salaried Ford Motor Co. construction engineer, and his wife, 77, realized the policy the agent suggested was for Blue Care Network, a subsidiary of the insurer, a plan that would cost $203.33 a month for her and $254.49 for him.

Confused, they called their son, Mike, who happens to be Michigan's attorney general.

Mike Cox successfully fought to hold down a recent rate increase in Blue Cross Medigap policies. He has also accused the insurer several times in the past year of failing to adequately promote the money-losing Medigap policies.

Blue Cross spokesman Andy Hetzel said the insurer loses $1,000 on every Medigap policy.

Cox advised his parents to get the exact name of the policy from the cousin, then go back to the Southfield office and request an application. "And don't take no for an answer," Rita said her son told her.

They went back and left with an application for Legacy Medigap, the new name Blue Cross has given its Medigap policy. They also bought a separate Part D plan to pay for prescription drugs, as most seniors do because Medigap policies don't have drug coverage.

"They are hiding it," Rita Cox said of Blue Cross. "The ones being hurt are seniors."

The Coxes' experience underscores problems seniors have in trying to find out about Blue Cross Medigap policies.

Blue Cross denies it has hidden its Medigap policy or steered customers to its subsidiary. Some 2,200 seniors enrolled in the Legacy plan in the last month alone, a sign that "clearly there isn't a widespread issue with regard to accessing the application, filling it out or getting enrolled," Hetzel said. The insurer has made improvements to more prominently list Legacy Blue applications and information on its Web site.

Hetzel attributed confusion to the dozens of Michigan Medicare plans sold. "The Coxes' family experience unfortunately is what a lot of families go through right now," he said.

Some of the confusion stems from a new Medigap policy, MyBlue, offered by Blue Care Network, a subsidiary of Blue Cross.

MyBlue policies cost more because administrators can charge higher rates based on a person's age, gender, health status, weight and county of residence.

Blue Cross can't charge higher rates because it is required by state law, as Michigan's nonprofit insurer of last resort, to offer one price for its Medigap policies.

Insurance brokers also get no commission to sell Legacy Blue plans as they do for a Blue Care Network policy. The commission typically is 20% of a plan's monthly premium.

As a result, some brokers don't tell seniors about the Blue Cross Medicare products, according to several local insurance brokers. The ones that do, like Barbara Plecas, an insurance broker in Walled Lake, tell seniors about Legacy Blue because "it's the right thing to do," Plecas said.

Louis Isabell, general manager of the Wixom-based Allchoice insurance firm, said some of his clients who requested Legacy Blue applications in October still had not gotten them, so they bought plans from other insurers.