Michigan Legislation That Would Prevent High Rate Increase For Private Health Plans

A bipartisan group of Michigan lawmakers on Wednesday proposed fourbills that would block private health insurers from significantlyraising rates during policy renewals, the Detroit Free Press reports. The legislation also would relax a requirement that the not-for-profit, tax-exempt insurer Blue Cross Blue Shield of Michigan receive approval from the Michigan Office of Financial and Insurance Servicesto increase rates. The insurer would be able to set rates on its own,and increases would be subject to review if the insurance office foundthem to be questionable. State Rep. Virgil Smith (D), chair of thestate House Insurance Committee, said he hopes to have committee hearings on the legislation soon. "We want to make insurance fair," Smith said on Thursday.

Opposition

Private insurers opposed to the plan this week formed the Coalition forAccess and Affordability in Michigan to challenge the legislation. Thecoalition comprises the Council for Affordable Health Insurance, the Life Insurance Association of Michigan, Aetna, Assurant, Humana, United Healthcare and HealthMarkets.

BCBSis Michigan's insurer of last resort, and it receives $80 million instate tax breaks for the designation, according to the Free Press.Mark Cook, vice president of government affairs at BCBS, said thatprivate insurers "cherry-pick 25-year-olds" and then "jack up therates" if the policyholder develops a health condition. He claims BCBSends up with more expensive policyholders and loses money as a result.

However,Frank Venuto, a legal consultant for United Healthcare, said privateinsurers are prohibited by law from dropping coverage at the time ofrenewal and that rate increases occur for an entire class of members,not for individual members. In addition, private insurers say theycannot take all applicants because they do not receive the tax breaksBCBS does. BCBS said legislation is needed to hold down rate increasesfor individuals who purchase private insurance.

According to the Detroit News,BCBS said it is losing millions of dollars on individual insurancepolicies and needs rate increases to pay for the coverage. Critics ofthe legislation say BCBS should use its $2.5 billion reserve to offsetrate hikes. "We need to make sure that what comes out of this is goodfor the consumer, not for the Blues, and not for the companies werepresent," Venuto said (Anstett, Detroit Free Press, 10/12).

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