Last week, Blue Cross Blue Shield (BCBS) of Michigan filed a rate increase request with the state that could raise rates for individual plans by more than 70 percent. The proposed rate hikes could hit about 400,000 BCBS members, including 209,000 seniors who have supplemental Medicare, "Medigap," plans. The insurer's proposed rate increases are as high as 72 percent for some of its age-rated individual plans.
BCBS justifies its request for rate hikes, claiming that projected losses in the individual market are expected to jump to $210 million this year. BCBS also says it expects to add another 76,000 individual members in 2009 and projects losses of up to $1 billion on its individual policies over the next three years.
BCBS's tax exempt non-profit status requires the insurer to provide any Michigan resident with health coverage, regardless of ongoing chronic or pre-existing medical conditions. BCBS argues that it offers coverage to residents who represent the most expensive insurance risks, adding further to the company's growing losses.
"The need for the increases is driven by a broken regulatory system in the individual insurance market that has not changed in nearly 30 years," BCBS spokeswoman Helen Stojic said. But Michigan Attorney General Mike Cox and a number of other policymakers and stakeholders doubt the insurer's calculations, and aren't convinced that the losses will be that high.
As part of the rate increase request process, BCBS members and the state attorney general's office, among others, are notified of the possible hikes and have the opportunity to provide their feedback to the state that authorities take into consideration when determining whether or not to green light rate changes.
Last year, BCBS secured state approved rate increases on about 20,000 members enrolled in individual plans. Hikes ranged from nearly 41 percent for the high end coverage, to slightly greater than 22 percent for the moderate-level plans.
For more information:
- see this Detroit News story