December 3, 2007

            DETROIT − Attorney General Mike Cox today called on the legislature to defeat a package of bills promoted by Blue Cross and Blue Shield of Michigan (HB's 5282-5285) and urged the Governor to veto the bills if they come to her desk.

            "Every change in this package of bills is aimed at increasing profits for a benevolent charity that is already making record profits now!" Cox said. "And the people, especially the old, sick, and most vulnerable, will pay more or lose insurance coverage. This is not about improving the quality of health care. These changes promote profits over people. They should be stopped."

            "None of these bills will become law without the Governor's signature. I call on Governor Granholm to announce her opposition and stop these bills now," Cox added.

            The package of bills (HBs 5282-5285) put forth by Blue Cross would:

• Eliminate "community rating" and force seniors and sicker citizens to pay more than current law;
• Allow Blue Cross to charge new customers with certain illnesses up to 80% more, without challenge;
• Allow Blue Cross to charge new customers with serious illnesses up to 250% more, without challenge;
• Double the time available to deny coverage for pre-existing illnesses, up to 12 months from the current six months;
• Triple the margins Blue Cross can keep from every premium dollar (30% of every premium dollar);
• Enable Blue Cross to raise rates without consideration of their surplus, for the first time ever;
• Allow Blue Cross to charge individuals more for health insurance based on where they live, for the first time ever; and,
• Eliminate the role of the Attorney General to argue against rate hikes and eliminate the ability of the Office of Financial and Insurance Services (OFIS) to set rates.

            "Oversight of rate requests by the Blues is critical," Cox said. "Just this year, our intervention reduced the Medigap rate hike, saving seniors $97.5 million initially, and more than $69 million annually after that."

            Bill Knox, Associate State Director for Government Affairs for AARP, said: "The bills would kill the community rating system and allow a wide range of premiums based on health status, age, and geography. AARP favors a 'pure' community rating system with a single premium for everybody regardless of status. The bills would price older and sicker folks out of the individual market."

            Charles Bell, Programs Director for Consumers Union, the nonprofit publisher of Consumer Reports, said: "Consumers Union strongly opposes the Blue Cross-sponsored legislation. These bills would drive up costs for many consumers and restrict access to coverage. The proposed legislation also contains many harsh anti-consumer provisions such as longer waiting periods for consumers with pre-existing conditions and elimination of both the policyholders' and Attorney General's ability to seek rate hearings. Such measures would hurt consumers across the board and have very negative impacts on vulnerable groups such as early retirees and chronically ill and disabled consumers who buy their own coverage. These bills are fatally flawed. They should be squarely rejected by policymakers."

            These proposed changes come on the heels of record-breaking profits and rate increases by Blue Cross:

• Blue Cross' surplus is $2.8 billion, the highest in history and more than double the $1.3 billion of five years ago;
• Since 2005, Blue Cross has spent hundreds of millions of dollars purchasing five new companies from across the country;
• Blue Cross' premium rates for Group Conversion increased 92% from 2003 to 2007;
• Blue Cross' premium rates for individuals increased 79% from 2003 to 2007;
• Over the last five years, Blue Cross and its subsidiaries have made more than $1 million in profits per day; and,
• Since 2004, Blue Cross' top officers salary and benefits packages increased by more than 42%, including Blue Cross President and CEO Richard Whitmer's compensation of $4,253,558 in 2006.

            "And all of this is happening against a backdrop of greater need," Cox noted. "One out of every four Michiganders is uninsured or on Medicaid, and the numbers continue to grow."

            According to Cox: "The Blues want it both ways − they want to maintain their tax-exempt status, which is worth at least $75 million each and every year but eliminate state oversight; charge individuals based on where they live, for the first time ever, and triple their ability to make profits."

            "The Blues were established to be a benevolent charity. With this package of bills, Blue Cross wants to abandon its historical mission to care for the oldest and sickest, and they want to gut the Attorney General's historical mission to protect them," Cox concluded.

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