August 6, 2009
LANSING -Michigan
Attorney General Mike Cox today announced that his intervention in Blue Cross
Blue Shield of Michigan (BCBSM) rate increase requests has resulted in $160
million in savings for approximately 163,000 Michigan residents who buy their
own health insurance.
"Blue Cross'
rate hike proposals would have knocked untold numbers of families into the ranks
of the uninsured," said Cox. "Instead, today is a victory for families who are
struggling to afford access to health care."
BCBSM
originally requested the rate hikes in a January 2009 filing with the Michigan
Office of Financial and Insurance Regulation (OFIR). In that filing, BCBSM
requested average rate hikes of 56% for Non-group rates (individuals who buy
their own insurance) and 41% for Group Conversion (those moving from an
employer-based plan to buying their own).
In testimony
given during the rate hearing, independent experts retained by OFIR estimated
that BCBSM could win rates as high as 54% for Non-group rates and 37% for Group
Conversion in the hearing process.
However,
Attorney General Cox intervened in the case and contested BCBSM's rate hike
requests. Cox argued BCBSM should have taken other steps to reduce the need
for rate increases, such as using its surplus. As a result of the Attorney
General's intervention, BCBSM agreed to reduce its Non-group rate request by
34%, down to 22%. BCBSM also agreed to reduce its Group Conversion rate
increase by 19%, also down to 22%, with a total savings of $160 million for
approximately 163,000 Michigan citizens. Additionally, the rates will not take
effect until October 1, instead of BCBSM's original request for a June 1 start.
No agreement,
however, was reached on Medigap rates, which affect more than 210,000 Michigan
seniors. Blue Cross is seeking a 31% increase, which would raise a senior's
average annual rate by $383. Cox announced he will continue to fight that rate
hike request before OFIR, and also opposes the interim rate hike request
currently pending. The next scheduled hearing date is September 14, 2009.
Cox noted
that his ability to achieve these savings for Michigan consumers would not have
been possible if legislation he opposed last year was enacted. In fact, if
similar legislation before the House of Representatives this year becomes law,
the Attorney General's office would be left powerless to achieve the savings
announced today and increases of $308 million dollars would be possible (a 75%
rate hike for Non-group and a 64% rate hike for Group Conversion subscribers).
|
|
Non-group Average
(Those who buy their own coverage)
|
Group
Conversion Average
(Buying coverage after losing a job with previous coverage) |
Total
Dollars |
|
BCBSM
PROPOSED
RATE HIKES |
56%
-
$122/month for individuals
-
$257/month for families |
41%
-
$99/month for individuals
-
$231/month for families |
$219 Million |
|
OFIR
EXPERT |
54%
- $117/month for individuals
- $248/month for families |
37%
- $90/month for individuals.
- 209/month for families. |
$206
Million |
|
AG
INTERVENTION RESULTS IN LOWER COSTS |
22%
-
$47/month for individuals
-$101/month for families |
22%
-
$53/month for individuals
-
$124/month for families |
$96
Million |
|
SAVINGS
FOR
MICHIGAN CONSUMERS |
- $75/month for individuals
- $156/month for families
- Total Savings:
$94.4 Million |
- $46/month for individuals
- $107/month for families
- Total Savings:
$65.6 Million |
$160 Million Savings |
The following
chart explains BCBSM's proposed rate hikes, the levels at which OFIR's
independent expert recommended, and the result of Cox's negotiations with BCBSM.
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