August 6, 2009
LANSING
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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).
