Schuette Warns Seniors Could "Get the Shaft" In Blue Cross Overhaul

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Attorney General Bill Schuette offered a warning to Michigan lawmakers Monday, telling them seniors could "get the shaft" if legislators rush an overhaul of Michigan's largest insurer.

During a morning hearing of the House Insurance Committe, Schuette said rates could skyrocket for the state's most vulnerable if the plan stays as is.

The governor and State Senate have already backed it. It would make Blue Cross Blue Shield a customer-owned non-profit. Currently, it is a charitable trust.

The company says the measure will level the playing field among insurers, ultimately driving prices down.

Gloria Kovnot of Grand Ledge fears that won't happen. She and her husband are cancer survivors and Medigap subscribers.

"There's nothing for us, there's no safeguard," Kovnot said. "We're locked into our rates till 2016, after that Blue Cross Blue Shield doesn't even have to write us, because we have pre-existing conditions."

That's what Schuette is concerned about. He told lawmakers a reform of the Blues is needed, but not without additional protections.

"I would not want us to rush through and pass a bill that does not fulfill our responsbilities," Schuette said. "There's a fiscal senior cliff out there and we don't want to be marching seniors off that cliff."

Medigap was a major focus for the house panel because it literally fills a gap in coverage for many Michiganders, covering expenses not covered by traditional Medicare. The federal Affordable Care Act applies only to primary coverage. Medigap is secondary and supplemental, meaning companies can deny for pre-existing conditions.

More than 200,000 seniors have Medigap plans with BCBS in Michigan. Their rates will be frozen until 2016 and subsidized for several more under the proposed transformation, but Schuette says they could still get hit with a 66 percent rate hike or be pushed out entirely.

"Technically in the bill Medigap would not have to be offered after 2016," Schuette added.

Blue Cross argues seniors have better options than Medigap in the current marketplace, like Medicare Advantage. Company officials say seniors will be well served if reforms go through.

"Insurers can compete in a fair and balanced way on price, service, network," Andrew Hetzel, with the company said. "These are the things that should really drive price down."

The house hearings will continue on Tuesday. The Insurance Committee won't be making any changes to the bill until its next meeting.

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