November 6,  2009

               LANSING - Attorney General Mike Cox today praised a preliminary ruling by the state insurance commissioner's office slashing proposed rate increases for Blue Cross Medigap insurance from 36.7% down to only 3.8%, saving about 200,000 Michigan seniors $85 million in the first year alone. 

"This is absolutely great news for Michigan seniors who are often unable to absorb increased costs because they live on fixed incomes," said Cox.  "If Blue Cross had its way in the legislature last year, my office would have been powerless to block this huge rate increase request."

While Blue Cross requested a 31% increase for Medigap seniors earlier this year, it recently increased that request to 36.7%.  The Attorney General's office intervened in the case and argued Blue Cross should not raise rates because it was failing to meet its statutory obligation to subsidize seniors' insurance costs.  Today's preliminary decision by an administrative law judge at the Michigan Office of Financial and Insurance Regulation agreed with the Attorney General's argument, saying Blue Cross must subsidize Medigap rates by a full $181 million.

As an example of the cost savings, the current Medigap Plan C monthly rate of $107.09 would have increased by $39.30 per month to $146.39.  Instead, under the preliminary decision, there would be a rate increase of only $4.07 per month, resulting in a savings of $35.23 per month. 

Mary Ablan, Executive Director of the Area Agencies on Aging Association of Michigan, praised today's results.

"A 3.8% increase would be a godsend to low-income seniors who are struggling as it is to pay heating bills and prescription drug co-pays," Ablan said.  "Hopefully the Insurance Commissioner will agree and deliver an early Christmas present to over 200,000 Michigan seniors."

Today's preliminary ruling marks the concluding phase of the rate hearing.  Both the Attorney General's office and Blue Cross have until November 20^th to file objections to the preliminary ruling, with a final ruling expected around December 4^th.  

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