People buying their own health insurance coverage soon could get some increased consumer and price protections, according to supporters of legislation overwhelmingly approved Wednesday by a state House committee.
But opponents say the bills now headed to the House floor would give Blue Cross Blue Shield of Michigan some unfair advantages over competitors and would not necessarily protect people buying health insurance.
The bills would apply to commercial insurers, HMO contracts and Blue Cross Blue Shield. Individuals seeking health insurance coverage would be required to fill out a health questionnaire from potential carriers. The insurers -- except for Blue Cross, which has a unique role in Michigan -- would be able to refuse coverage if an individual doesn't satisfy criteria for coverage.
An insurer who agrees to cover an individual would have to renew or continue the coverage for as long as the individual wants, as long as premium bills are being paid and nothing has been done to invalidate the policy. There would be limits on rate increases at renewal time based partly on geography and age, which supporters say would make coverage more affordable.
People denied coverage by other insurers would be picked up by Blue Cross in a limited but guaranteed coverage plan. Over time, other insurance carriers would have to help cover losses in the pool based on their market share.
Blue Cross says it loses money on its plans that cover just individuals. But there would be changes in state law that would make the system more sustainable for Blue Cross.
A big incentive for Blue Cross would be allowing one of its subsidiaries, the Accident Fund, to expand its product offerings beyond workers' compensation to other types of insurance such as fire and casualty. That could bring in more money for Blue Cross overall.
Blue Cross estimates that about 6 percent of Michigan's insurance market relates to coverage for individuals, as opposed to group coverage provided through employers. Blue Cross expects the market covering individuals to grow dramatically in the next few years because fewer workers and retirees are being covered by group plans in part because of Michigan's struggling economy.
"The wave is coming. It's already started," Mark Cook, vice president of government affairs for Blue Cross, told the House Insurance Committee.
Small business associations testified that some companies are dropping group coverage because they no longer can afford it, leaving more people to find their own coverage.
Blue Cross is Michigan's insurer of last resort, meaning it won't turn away customers in exchange for exemption from state taxes.
Critics of the new legislation said it would undercut oversight and regulation of Blue Cross competitive advantages beyond its state tax-exempt status. Representatives of some companies, including Aetna, said the legislation would lessen the ability to challenge Blue Cross rate increases.
Supporters of the bill disputed those claims, saying adequate regulation would be in place. Blue Cross no longer would have to get prior approval for some rate increases, but the rates still could be reviewed by regulators, much like the process for other insurance companies.
The bills were introduced last week, and some opponents said not enough time has been allowed to analyze their content.
J.P. Wieske, a representative of the Council for Affordable Health Insurance, said the process was secretive. His group includes several health insurers.
"We feel this is a serious violation of consumer protection," Wieske said.
The insurance bills are House Bills 5282-5285.