Priority Health, Blues On Opposite Sides In Legislative Battle

January 21, 2008
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GRAND RAPIDS — West Michigan’s two largest health insurance providers lined up on opposite sides last week in the increasingly heated debate over a legislative proposal to reform the individual insurance market.

Priority Health announced it intends to testify before the state Senate’s Health Policy Committee later this month against a package of bills, backed by Blue Cross Blue Shield of Michigan, which would bring changes to the way health insurance companies sell to people who buy their own policies. About 6 percent of insured people in Michigan purchase individual policies, a market that is expected to grow.

On the same day, a new coalition called Consumers for Fair and Affordable Insurance Reform, which includes BCBSM, kicked off with a press conference in Lansing.

“We think these common-sense reforms will benefit Michigan consumers and promote the long-term affordability of coverage in Michigan,” Blue Cross spokeswoman Helen Stojic said.

Priority Health’s strongest objection is to a provision that would require every insurer to pay into a pool intended to offset losses that Blue Cross incurs from covering people who can’t get insurance elsewhere, said David Bilardello, executive director, commercial products, for Priority Health. State law requires the nonprofit Blue Cross to be the insurer of last resort. 

“They get the benefit of having the member, but the losses they sustain would be subsidized by other, competing carriers,” Bilardello said. “The trouble with that is when we price our products, we not only have to price with our own risks, we have to add more because we have to fund losses that Blue Cross might have. That’s the biggest issue we have with it.”

Stojic said similar arrangements are used in other states: “The most common way of funding it is a carrier assessment based on market share in the individual market. So Blue Cross is going to take on the biggest chunk of the pool, administer the pool and eat the administrative costs,” she said.

Bilardello called the proposed assessment “a hidden tax.”

“We actually agree with Blue Cross that this is a growing market,” he said. “We feel more people in the future are going to buy individual insurance coverage, so we are looking at ways to enter that market to a larger extent than we are already in there. If we do enter that market, we do want to be competitive. This legislation will cause some big concerns with entering that market.”

John Truscott, spokesman for Consumers for Fair and Affordable Insurance Reform, said the organization includes business, labor and consumer groups. The Grand Rapids Area Chamber of Commerce is among them.

The four-bill package moved quietly through the state House last fall, until state Attorney General Mike Cox issued a December press release denouncing them. Since then, opposition has picked up steam from commercial health insurers, health maintenance organizations, the Michigan chapter of the American Association of Retired Persons, the United Auto Workers and others.

The debate now rests in the Senate Health Policy Committee, which is accepting comments and plans a hearing for Jan. 30.

The bills contain many other provisions, such as doubling the current six-month waiting period for coverage for people with pre-existing conditions; instituting regulations on premium pricing; and permitting BCBSM’s for-profit worker’s compensation subsidiary, Accident Fund Insurance Co., to sell other types of insurance.

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