The coalition’s name says it all: Put Michigan People First.
First, it beat back legislation it claimed would leave Blue Cross Blue Shield of Michigan under-regulated and its customers overcharged.
Now, AARP Michigan and the other coalition members—including commercial insurers, unions, consumer advocates and groups representing disabled and older people—are trying to make basic affordable health care available to everyone.
But they must fight a renewed attempt by Blue Cross to get the legislature to change the insurance landscape.
“Our position is that what Blue Cross wants to do is to create more uninsured people and force people to pay higher rates if they are insured,” said Eric Schneidewind, president of Michigan AARP. “Our success in this entire debate will be measured by whether we can change the conversation from rate increases to how to develop an affordable health care plan for all Michigan citizens.”
Health insurance reforms were one of the most contentious issues at the state Capitol for the past two years, and they resurfaced quickly this year. In January, Blue Cross announced plans to reduce staff and seek steep rate hikes in policies—increases company officials said are necessary because of legislative inaction.
Andrew Hetzel, vice president of corporate communications for Blue Cross, said the regulatory system is slow, outdated, and saddles Blue Cross with the expense of caring for the high-risk, high-cost population.
“It’s potentially a $1 billion problem over the next three years,” Hetzel said. “It has the potential to undermine the financial health of our business.”
The stakes are high for Michigan residents, including AARP’s 1.6 million members. Older people generally have greater health care needs and often live on fixed incomes. Blue Cross has requested average rate increases of 56 percent for individual plans, 31 percent for Medicare supplemental plans and 42 percent for group conversion plans that offer coverage for people who previously had employer-provided insurance, but now must pay the premium themselves.
Michigan residents are increasingly turning to individual insurance. Unemployment is above 10 percent, the highest rate in the nation. Even many of those who have a job have lost coverage. Fifty-three percent of Michigan’s private employers offered health coverage in 2006, down from 64 percent in 2000, according to the Center for Healthcare Research & Transformation in Ann Arbor.
Blue Cross, designated by the state as the insurer of last resort, argues that its for-profit competitors are free to cherry-pick younger, healthier consumers, knowing Blue Cross is required to accept those more expensive to cover.
Blue Cross, which operates as a not-for-profit company, estimates it lost $140 million on policies for individuals in 2008 and has projected a loss of $320 million this year. It wants the process for raising rates streamlined, and it wants for-profit insurers to share in the burden of caring for the most costly population.
But AARP and the Put Michigan People First coalition say Blue Cross benefits from an exemption from state tax, estimated to be worth more than $80 million a year, that other insurers don’t get. In exchange, the coalition argues, the company has a social mission to provide affordable health care to all. AARP members made thousands of contacts to lawmakers to express opposition to the legislation last year.
“One of AARP’s No. 1 priorities is access to affordable, dependable, quality health care,” said Felicia Wasson, associate state director for government affairs. “These bills are diametrically opposed to that goal.”
About 1.2 million Michigan residents are uninsured. Put Michigan People First is developing a plan for comprehensive insurance reform it claims could sharply reduce that number.
The plan is expected to require all insurance companies to offer a basic level of insurance—covering such things as wellness programs, prescription drugs and doctors’ office visits—at the same affordable price. Subsidies would be available for those with low incomes.
“We ought to go head-on with this problem and come up with a solution that makes insurance coverage affordable for all people,” AARP’s Schneidewind said. “That is what we intend to do in 2009—work with allies to drive toward solutions, instead of changes that make the problem worse.”Chris Andrews, a freelance writer living in Okemos, Mich., has covered the state government for 21 years.