Legislation that would allow Blue Cross Blue Shield of Michigan to become a not-for-profit mutual insurer cleared the state Legislature on Thursday and heads for Gov. Rick Snyder’s signature.
Under the two-bill package, Blue Cross Blue Shield would begin paying about $100 million annually in state and local taxes and steer $1.5 billion over 18 years to a fund to promote wellness and health prevention. The bills bring Blue Cross, HMOs and commercial insurance carriers under the same set of regulations.
“This legislation is fair for Michigan’s health insurance industry and good for our state’s future,” said Blue Cross Blue Shield President and CEO Dan Loepp. “It enables Blue Cross to contribute in significant ways to a healthier Michigan, gives the Blues and our competitors a level and competitive playing field, and addresses concerns of those who depend on Blue Cross’ longstanding contributions as a nonprofit company.”
Blue Cross Blue Shield of Michigan directors still need to approve moving ahead with the transition. Directors have already endorsed the concept of the Blues becoming a non-for-profit mutual insurer owned by policyholders.
Gov. Snyder said he will sign the bills soon.
The final version of the bills included amendments advocated by the Michigan Association of Health Plans, which represents HMOs and commercial carriers that cover about 2 million people in the state. The amendments included a ban on the kind of so-called “most-favored nation” clauses in contracts with hospitals to get the best possible price, a practice that the MAHP said Blue Cross Blue Shield used at the expense of competitors.
Language in the bills also obliges Blue Cross Blue Shield to cover its fair share to offset the underfunding of Medicare and Medicaid.
An August report from the Michigan Office of Financial and Insurance Regulation concluded that Blue Cross underpays hospitals to cover the underfunding of Medicare and Medicaid, forcing competitors to pick up the difference and raising their costs. OFIR ordered Blue Cross to address the deficiency with a new reimbursement methodology.
“We continue to believe that these changes are critical in moving Michigan toward a more competitive health insurance marketplace,” said MAHP Executive Director Rick Murdock. “We now look forward to working with Gov. Snyder’s administration to implement these changes as we continue to develop more affordable health care options for the citizens of Michigan.”
A recent American Medical Association analysis using 2010 data concluded that Michigan has the third-least competitive health insurance market in the nation, largely due to Blue Cross Blue Shield’s 70-percent statewide market share.