Traverse City Record-Eagle

Michigan

December 7, 2012

House approves to overhaul Blue Cross

LANSING — The Republican-led Michigan House on Tuesday followed the Senate in approving a proposal to end Blue Cross Blue Shield of Michigan's tax-exempt status and transform it from a charitable trust to customer-owned nonprofit.

The legislation passed the Republican-controlled Senate in October.

Supporters said the proposal modernizes the insurer and allows it to be taxed and regulated as its competitors. Critics have said the measure short-shrifts the elderly and reduces oversight of a company controlling 70 percent of the market.

"The Legislature's reforms to transition Blue Cross Blue Shield of Michigan to a nonprofit mutual company will play an important role in providing better access to quality health care and investment in the health of all Michiganders," Gov. Rick Snyder said in a statement. "I thank Senate and House leadership for their commitment to reinventing health care in Michigan, and I look forward to signing these reforms soon." Once Snyder signs the measure, Michigan will join 12 other Blue Cross Blue Shield companies nationwide structured as mutual insurers. That means the organizations are owned by members. Those companies operate in 14 states.

"We continue to believe that these changes are critical in moving Michigan toward a more competitive health insurance marketplace," said Rick Murdock, executive director, Michigan Association of Health Plans.

The AARP said it was disappointed the vote and warned of a backlash by its members of older state residents.

"The majority of legislators turned their backs on older Michiganders when they voted in favor of two bills that will take at least $876 a year out of the pockets of approximately 176,000 seniors who will pay higher Medigap premiums as of 2016," said AARP Michigan State Director Jacqueline Morrison . "AARP Michigan will notify our 1.4 million members to let them know how their Senators and Representatives voted on this legislation that will have a negative financial impact on many seniors, who are already burdened by a new pension tax and other recently enacted tax changes."

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