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Mich. Senate OKs Blue Cross Blue Shield Overhaul

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CBS Detroit (con't)

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LANSING (WWJ/AP) - The state Senate on Thursday again approved an operational overhaul of Blue Cross Blue Shield of Michigan – the state’s largest health insurer – about a month after Gov. Rick Snyder vetoed one of his top priorities because of last-minute abortion provisions added to gain majority Republicans’ support.

The bills that won unanimous approval no longer include language that would prevent insurers and businesses from providing elective abortion coverage in employee health plans. The plan now heads to the House, where its future is murkier because a new crop of lawmakers took office weeks after Republican Gov. Rick Snyder vetoed the bills.

Supporters say the proposal modernizes the insurer and allows it to be taxed and regulated as its competitors. Critics say the measure hurts the elderly and reduces oversight of a company controlling much of the market.

The proposed reworking of Blue Cross does away with a law that gives the insurer immunity from paying about $100 million a year in taxes to state and local governments in exchange for providing insurance coverage regardless of a customer’s health status.

Another key element is what supporters call regulatory reform and critics call deregulation. Rate change requests would be reviewed by the state insurance commissioner, as other insurers currently are, and no longer be subject to an extra layer of scrutiny by the state attorney general.

The proposed overhaul seeks to modernize but not sell Blue Cross, which is governed by a separate state law from other insurers and typically waits much longer for its rate changes to be reviewed. Streamlining regulations, supporters say, is particularly important as health insurers gear up for the federal Affordable Care Act to take full effect and get products and rates ready for an online health exchange where people can compare and buy their own insurance plans.

Blue Cross has been designated the state’s insurer of last resort – meaning it must provide insurance coverage regardless of a customer’s health status. Because of that, Blue Cross has been exempt from paying several local and state taxes. The measures would require the company to pay those taxes.

By transforming, Blue Cross also would shed its charitable “social mission” and contribute up to $1.5 billion to a nonprofit foundation carrying on that work. The foundation would work to improve public health and health care access, particularly for children and the elderly. About 60 percent of the money is earmarked in the first four years to subsidize Medigap, which fills the gap in Medicare coverage for seniors, to prevent rates from significantly rising.

Critics say the contribution is not set in stone and neither is the size of the tax bill after credits are taken into account. They fear that the social mission will be diminished because it doesn’t cover what Blue Cross currently contributes to it.

TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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