September 15, 2009

LANSING - Attorney General Mike Cox today called on Blue Cross Blue Shield of Michigan and its subsidiary, Blue Care Network (BCN), to disclose the finances of BCN's purchase of Physicians Health Plan of Mid-Michigan (PHP).  The sale of the Lansing-based subsidiary of Sparrow Health System was announced by PHP today.  

"Blue Cross and its subsidiaries must explain how they can afford to buy another company even as they fight to raise rates on seniors," said Cox.  "Could these funds have been used instead to help avoid rate increases on struggling Michigan residents?  Until that question is answered, I will remain skeptical."

Cox noted that Blue Cross has a history of making loans and cash transfers to its subsidiaries for the acquisition of other companies and wants to know if such transfers were a part of the PHP acquisition.  Blue Cross and its subsidiaries have spent over $350 million buying other companies since 2005.  However, during that same period, Blue Cross has claimed millions in losses and asked for rate increases on multiple lines of health insurance.

Cox is currently fighting a Blue Cross proposal to raise Medigap rates by 31.2% on senior citizens before the Office of Financial and Insurance Regulation.  

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