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Michigan consumers could lose with private BCBS

October 16, 2012

Consumers Union: Michigan Consumers Could Lose Big with Private BCBS

Michigan may lose big under a rushed proposal being forced through the legislature to privatize state-owned health insurer Blue Cross Blue Shield of Michigan. The Senate Insurance Committee is scheduled to vote today on two bills (S 1293 & S 1294) to privatize BCBS of Michigan, with a full Senate vote expected to follow quickly.
“There is no legitimate reason this proposal should be jammed through the legislature at the last minute. A deal like this that may impact 70 percent of Michigan’s health insurance market deserves careful scrutiny,” said Laurie Sobel, Senior Attorney for Consumers Union, the advocacy division of Consumer Reports.
Blue Cross Blue Shield of Michigan has operated as a non-profit insurer for 70 years, allowing the company to avoid taxes while working under careful scrutiny to ensure fair premium rates and reliable protections for residents with pre-existing health conditions.
Estimates show the company could be worth as much as $10 billion, but the proposal to privatize the state’s largest insurer will cost the insurer a fraction of that — $1.5 billion paid back to the state over 18 years. The fact that this inadequate payment is not included in the language of the legislation is equally troubling. Additionally, BCBS customers in Michigan can currently count on a thorough review process if the nonprofit insurer decides to raise rates on policyholders. But this proposal would end that review process, leaving customers at the mercy of the insurer.
“Given the uncertainty about the true value of BCBS of Michigan and the potential loss of consumer protections for Michigan residents, the Senate must slow down this half-baked proposal or risk getting a bad deal for consumers,” said Sobel. “We also believe a health impact analysis needs to be done to mitigate the harm from losing a nonprofit charitable institution.”
The quick timeline for passing the measure prevents appropriate transparency and is seemingly an effort to sneak the proposal past Michigan residents. Assertions that this change in status from non-profit to a mutual company are necessary to comply with the forthcoming full implementation of the national healthcare law are baseless.
Consumers Union, which supports Attorney General Bill Scheute’s call for a more thorough financial evaluation of the deal, has worked to protect consumers in non-profit conversion schemes throughout the nation over the last two decades and strongly opposes this hurried effort that may result in a bad deal for Michigan residents.
To schedule an in-person or phone interview with Laurie Sobel of Consumers Union, contact Kara Kelber or David Butler of Consumers Union at 202-462-6262.