January 29, 2009

    LANSING -  Attorney General Mike Cox today announced that he has proposed a set of guidelines to members of the Michigan Legislature to use as they make their decisions on how to reform Michigan's health care system.
 

    Last year, Cox strongly opposed anti-consumer proposals supported by Blue Cross Blue Shield of Michigan (Blue Cross), the state's insurer of last resort.  Most significantly, Cox fought efforts to virtually eliminate the oversight powers of the Governor and Attorney General in the rate setting process, which would have allowed Blue Cross to raise rates without being required to prove why an increase was necessary.

    This year, as the new legislative session begins, Cox is expressing optimism that the Legislature can find a balance of reforms which will protect consumers against unreasonable rate increases, expand access to care and keep Blue Cross as a stable insurer of last resort.

    "Michigan's health care system is in need of reforms which will protect consumers, first and foremost, while also keeping Blue Cross healthy," said Cox.  "I am offering these suggestions to assist Legislators as they seek out creative solutions to our state's health care problems."

    In a letter delivered to every member of the Michigan House of Representatives and Senate, Cox asked the legislature to consider 10 key points when finalizing any legislation:

1. Maintain the current oversight powers of the Governor and Attorney General in the rate setting process, preserving the power to ask questions and bringing transparency to the process. 
    

2. Provide for an alternative expedited hearing that gives Blue Cross increased market flexibility while retaining a fair and transparent rate hearing process for consumers.
    

3. Maintain Blue Cross' status as insurer of last resort by tying its tax subsidy to the creation of any high-risk or guaranteed access pool.
    

4. Protect consumers by shortening the pre-existing exclusion used by commercial insurers from one year to six months.
    

5. Maintain use of Community Rating.  However, if rate bands are allowed then Blue Cross must be required to keep them narrower than those used for businesses.  Individuals should not be exposed to higher price fluctuations than businesses.
    

6. Expand access to care by requiring Blue Cross to purchase a license and pay associated fees before granting it the unfettered ability to buy other companies.  These fees would be used to create a fund which provides access to subsidized catastrophic care coverage for individuals and certain small businesses.
    

7. Mandate that Blue Cross pay taxes on any surplus funds used in the purchase of other businesses.
    

8. Make Blue Cross more transparent by implementing new reporting requirements for charitable expenditures.
    

9. Require Blue Cross to report to the state when its reserves surpass excessive levels and prohibit reserves from growing too large, which generally means consumers have been charged too much.
    

10. Explore other areas to identify cost savings, including the concept of pooling segments of the individual market with segments of the small business market to lower rates for everyone, and to require an annual OFIR report comparing health care costs in Michigan to the rest of the nation.

    "The Michigan Legislature has an extremely difficult road ahead due to the budget and other pressing policy issues," Cox concluded.  "I offer these points as guideposts to assist them as they consider health care reform.  Blue Cross must remain a healthy and vibrant part of Michigan, but any reforms must also protect consumers."

 Attachment: Letter to Legislators from Attorney General Mike Cox, January 29, 2009

- 30 -