Snyder: Make Blue Cross Blue Shield Tax Paying Insurance Company

By: Lindsay Veremis Email
By: Lindsay Veremis Email

Big changes could be in store for the insurer that covers 4.3 million Michiganders, as Governor Rick Snyder annouced plans Tuesday to transform Blue Cross Blue Shield into a mutual insurance company.

Among other things, that would subject the nonprofit to an additional $100 million a year in state and local taxes.

For consumers, Snyder says the move helps keep health care affordable and accessible to everyone.

"This is a win for everyone given the circumstances we face and the need to move forward," he said.

Since 1980, BCBS has held a unique spot in the landscape of Michigan health coverage. Deemed "insurer of last resort" the nonprofit would cover consumers other insurers would not.

Snyder says times have changed.

"We should update, we should move to the 21st century with our rules and regulations to keep up with that," he said.

Under the Affordable Care Act, Snyder says Michigan no longer needs BCBS as a last resort.

"Insurers won't be allowed to decline coverage for people because of pre-existing conditions," Andy Hetzel, with Blue Cross Blue Shield said.

Snyder's plan would make BCBS a mutual company, owned and operated by its policy holders. It would also require the insurer to pay $1.5 billion over 18 years into a new, separate nonprofit.

"Which would fund programs to improve the health care access and the health of the people of Michigan," Hetzel added.

BCBS says the proposal does what it has wanted for years, levels the playing field. Currently commercial health insurers, nonprofit HMOs and BCBS all face different regulations with different rules.

"He proposes a regulatory system where everybody is treated the same," Hetzel said. "The average consumer is going to have more choice from affordable health plans from a number of insurers that are going to compete on a fair and balanced set of rules."

The Michigan Association of Health Plans has doubts about that. It represents other insurers and says BCBS has a monopoly in Michigan, 70 percent of the market.

"If you simply convert BCBS into a mutual without making other changes then the competitive advantage remains with Blue Cross," Richard Murdock, with the association said. "Generally speaking that is more price issues for consumers, individual consumers paying more than they probably have to."

Murdock wants the governor's proposal to be looked at closely. Legislators and the Attorney General's office agree. With many unanswered questions, they're calling for a thorough review.

BCBS has made the transition into a mutual company in 18 other states. For it to happen here, both lawmakers and the insurer's board of directors would have to sign off on the plan.


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