March 8,  2010

            LANSING -  Michigan Attorney General Mike Cox today announced today that Blue Care Network, a subsidiary of Blue Cross Blue Shield of Michigan (BCBSM), has abandoned its attempt to purchase Physicians Health Plan of Mid-Michigan (PHP) after his office found such a merger would be anticompetitive and had said it intended to file a civil antitrust lawsuit jointly with the United States Department of Justice.  The review of the proposed merger showed that it would have resulted in BCBSM having nearly a 90% share of the commercial health insurance market in Lansing.

Cox said a merger giving BCBSM such a large market share would lead to higher health insurance prices, fewer choices of health insurance carriers, and a reduction in the quality of health insurance plans.  The merger also could have given BCBSM the power to the lower reimbursement rates it paid to Mid-Michigan physicians, resulting in a decrease in the quantity of physician services offered to patients.  In contrast, ongoing competition between the two companies helps maintain lower prices, better services, and more innovative products for Mid-Michigan residents. 

"This is great news for Michigan residents, who are increasingly forced to buy their own insurance at a time when the economy is forcing cutbacks to family budgets," Cox said.  "Competition is the force that keeps prices down and quality up."

Cox also questioned how the company could afford to buy other companies when it recently claimed to be struggling financially.  He noted that BCBSM and its subsidiaries have spent over $350 million buying other companies since 2005, while simultaneously claiming millions in losses and asking for massive rate increases on families and senior citizens.  In 2009, the Attorney General's office successfully argued against BCBSM's requested rate increases to Medigap and nongroup and group conversion policies, saving Michigan citizens over $250 million.  In 2008, Cox also blocked legislation which would have given BCBSM an unchecked ability to raise rates by effectively eliminating Attorney General oversight of the rate setting process.

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