Blue Cross Blue Shield of Michigan FAQ'S

September 2009

A recent decision by the Office of Financial and Insurance Regulation increased Blue Cross Blue Shield of Michigan's (BCBSM) rates for Non-group (individuals who buy their own insurance) and Group Conversion (individuals moving from an employer based plan to their own plan) by an average of 22%.   The Office of Financial and Insurance Regulation Commissioner's (Insurance Commissioner) order has created some confusion because BCBSM recently informed affected subscribers of rate increases for next year that exceed 22%.  These FAQ's explain why BCBSM's rate increases for some Non-group and Group Conversion plans may exceed or be less than 22%.  They also explain that both the average increase and the increases for individual plans would have been significantly higher without the intervention of the Attorney General.  

1.      What is the Attorney General doing to try to
         control health insurance rates? 

Attorney General Mike Cox fought BCBSM's original rate increase requests this year.  As a result, average rate increases were reduced to 22%, from an average high of 56% and 42%, and saved nongroup and group conversion subscribers $160 million.

 

The Attorney General is also continuing to fight legislation that would allow BCBSM to seek its original, higher, rate increase without any review by the Attorney General's office. 

 

Similar to last year, BCBSM is again seeking legislation that would virtually eliminate the Attorney General's and the Insurance Commissioner's ability to fight rate increases.  In fact, if pending legislation in the legislature was in effect today, BCBSM could have automatically raised rates by 75% for nongroup and 64% for group conversion on June 1st of this year. 

 

Additionally, the Attorney General is fighting BCBSM's use of surplus funds to buy other companies.  BCBSM recently gave $124 million to its subsidiary to purchase a California company.  The Attorney General filed a complaint challenging the $124 million and is currently in the Michigan Court of Appeals on the issue. 

 

The Attorney General believes that BCBSM's $2 billion surplus should be used for subscribers and not for buying more companies or giving greater bonuses to BCBSM's executives.

2.      What rate hikes did BCBSM ask for? 

Nongroup Subscribers - BCBSM's original request was for an average rate increase of 56%, with a range of increases between 0 to 80% depending on the particular health plan.  

 

Group Conversion Subscribers - BCBSM's original request was for an average rate increase of 42%, with a range of increases between 0 to 80% depending on the particular health plan. 

3.       What happened after the Attorney General Challenged BCBSM? 

Nongroup Subscribers - The Insurance Commissioner approved an average rate increase of 22% (down from 56%), with the range of the increases reduced to 0 to 40%.

 

Group Conversion Subscribers - The Insurance Commissioner approved an average rate increase of 22% (down from 42%) with the range of the increases reduced to 0 to 40%.

4.      Why did my rates increase by more
          than 22%?           

BCBSM's overall rate increase is a composite average, made up of the rates for a number of different individual health plans.  Accordingly, the rates for an individual subscribers' health plan may vary within the ranges described above.

 

Under BCBSM's original rate increase request, rates could have gone up as much as 80% for some plans. 

5.      What are my options now? 

It is important for BCBSM and the Insurance Commissioner to hear your concerns and complaints.

 

The Office of Financial and Insurance Regulation (Insurance Commissioner) is the agency that oversees and regulates BCBSM's rates.  The toll free number for this agency is 1-877-999-6442.  The agency's website is www.michigan.gov/ofir.

 

BCBSM's toll free number is located on the back of you BCBSM ID card.  BCBSM's website is www.bcbsm.com.

 

Subscribers should consider moving between plans within BCBSM.  Some plans have higher deductibles and co-pays but the monthly premium is significantly lower with the same benefits.  Thus, some subscribers may actually save money over the year by switching plans because the lower premiums offset the higher deductible and co-pay.

 

You may also call your legislators and tell them to stop any attempt to take away the Attorney General's oversight.  Without this important consumer protection, rate increases could have been much higher.