BCBSM, Michigan AG and Michigan Office of Financial and Insurance Regulation Reach Agreement to Keep Rate Increases under 10%

June 28, 2011 -DETROIT - Attorneys from Blue Cross Blue Shield of Michigan, the Michigan Attorney General and the Office of Financial and Insurance Regulation have reached an agreement that holds rate increases under 10% for all Michigan residents with BCBSM Medigap (Medicare Supplemental) policies.

The agreement means Michigan residents with Medigap Plan C would have a new monthly premium of $121, an increase of 9%. Medigap Plan A new monthly premiums for Michigan residents would be $39.

The parties also agreed that non-Michigan residents would no longer receive the same rate as Michigan residents for BCBSM Medigap plans. A small portion-four percent-of BCBSM's 216,000 Medigap members are out-of-state residents. Under this agreement non-residents will now pay the full cost of their Medigap product so their monthly premiums will be $194 for Plan C and $64 for Plan A.

The agreement concludes the rate review process. A hearing on a BCBSM proposal to base Medigap subsidies on a senior's income, which would have given the lowest-income seniors a premium reduction, has been replaced with the new agreed-upon rates.

"We were pleased to reach an agreement by all parties that keeps the rate increase in the single digits for Medigap for eligible seniors residing in Michigan," said Andrew Hetzel, BCBSM vice president of corporate communications.

"Even with our new rates, Blue Cross continues to expect financial losses for its Medigap products," said Hetzel. "Our new rates for Medigap continue to be far below what it costs to provide health care for our Michigan Medigap members."

The new Medigap rates are expected to become effective on August 1, 2011.

In 2010 BCBSM experienced $200 million in underwriting losses in its Medigap products and is the only Michigan health plan required to offer individual Medigap coverage to residents at below cost.