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Tuesday, 11 September 2012 12:35

Snyder proposal would transform Blue Cross Blue Shield of Michigan into tax-paying entity

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LANSING — Blue Cross Blue Shield of Michigan would transition to a not-for-profit mutual insurance company and begin paying state and local taxes under a proposal rolled out this morning by Gov. Rick Snyder.

The proposal, worked out in an agreement with Blue Cross, needs approval from both the Legislature and directors of the state’s largest health insurer, which covers 4.4 million people. The proposal would bring Blue Cross under the same regulations as HMOs and commercial insurance carriers as federal health care reform dramatically alters the landscape come Jan. 1, 2014 by requiring all insurers to issue policies to anyone seeking coverage.

“The old way of doing business doesn’t meet Michigan’s demands today for a competitive and efficient health care system,” Gov. Snyder said. “Michigan needs a new regulatory environment that continues our reinvention and allows us to attract the kind of investment that will fuel our comeback. This proposal will help us do that.”

Under the proposal, Blue Cross Blue Shield would pay $100 million annually in state and local taxes as a mutual insurance company and pay $1.5 billion over 18 years to a new not-for-profit organization that would carry out the insurer’s traditional “social mission” to improve the health of Michigan residents and keep health coverage affordable.

“Blue Cross has long advocated for all health insurers to play by the same rules,” Blue Cross Blue Shield of Michigan President and CEO Daniel Loepp (pictured right) said. “This plan is not exactly what Blue Cross would have proposed, but it does create a fair and balanced set of rules for health insurance.

“Regulations should be fair to all. They should protect consumers, expand choice and competition and preserve an insurance safety net people can count on. Our board is open to considering this proposal because it preserves Blue Cross’ nonprofit mission and sets Michigan’s insurance market up for success in the future.”

If the plan earns approval, Blue Cross Blue Shield of Michigan would join 11 Blues plans in 18 states that have restructured as mutual insurance companies.

The Michigan Association of Health Plans, which represents HMOs and commercial carriers in Michigan, initially views the proposal cautiously.

The association need to fully analyze the proposal before offering a reaction, although Executive Rick Murdock said the key for his members is creating an even playing field for all health plans in Michigan.

A 2011 American Medical Association report ranked Michigan as one of the least competitive states in the nation for health insurance, noting Blue Cross Blue Shield of Michigan’s 70-percent share of the commercial market.

“How does this make us better is kind of the question we need to ask everyone,” Murdock said. “If all we’re doing is converting Blue Cross to a mutual without doing any other change, then we’re just moving a monopoly from one platform to another. We haven’t affected the competitive environment.”

Read 2708 times Last modified on Tuesday, 11 September 2012 16:15

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