Lawmakers add consumer protections to Blues mutualization

The Michigan state Senate has passed two companion bills allowing Blue Cross Blue Shield of Michigan to become a nonprofit mutual insurance company--but they include several major changes to Gov. Rick Snyder's original proposal.

Addressing concerns raised by Michigan Attorney General Bill Schuette, the Michigan Association of Health Plans, as well as senior and consumer groups, the two pieces of legislation (SB 1293 and 1294) now require Blue Cross to subsidize Medigap coverage for an additional five years, reported Michigan Live.

The bills also specify that if Blue Cross either converts to or is sold to a for-profit company, Michigan citizens, not only Blue Cross members, would be the recipients of any proceeds, which would be determined by a full financial evaluation. In addition, Blue Cross would be required to obtain prior approval from the state insurance department to use most-favored nation clauses, Crain's Detroit Business reported.

But despite these added protections, the bills still didn't garner support from critics, according to the Associated Press. Schuette said "broader, more long-term protections for Michigan's most vulnerable are still needed." And the Michigan Association of Health Plans said more changes, including requiring Blue Cross to pay hospitals its fair share of Medicaid and Medicare shortfalls, are still needed before it would support the bills. "Blue Cross gained … market share in part by setting up a payment model that explicitly refuses recognition that hospitals suffer from shortfalls in payments by Medicaid and Medicare," MAHP Executive Director Rick Murdock wrote in a letter to the Senate.

Meanwhile, the Consumers Union advised the Michigan legislature slow down the mutualization process. "There is absolutely no legitimate reason this proposal should be jammed through the legislature at the last minute," Senior Attorney Laurie Sobel said. "A deal like this that may impact 70 percent of Michigan's health insurance market deserves careful scrutiny."

The bills move on to the House, where they likely will be considered next month, Crain's noted.

To learn more:
- here are the bills (SB 1293 and 1294)
- read the Michigan Live article
- see the Crain's Detroit Business article
- check out the Associated Press article