Health care reform gets mixed looks

August 7, 2009
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(Editor’s note: This is the first installment in a series of Business Journal stories focusing on health care reform issues.)

Ongoing debates on health care reform in Lansing and in Washington, D.C., cover everything from individual market reform here in Michigan to universal, government-sponsored health coverage in all 50 states. Action in both capitals is stalled, likely until after the congressional recess ends in September.

The debate in Congress and the potential for sweeping reforms under Democrats is, for many, overshadowing the efforts in the state Legislature. Blue Cross Blue Shield of Michigan is trying to steer attention to the Legislature, prodding lawmakers to act on state-level reforms aimed at two issues: individual market reform and covering the uninsured.

BCBSM Vice President for Corporate Communications Andrew Hetzel said the nonprofit, Michigan’s largest health insurer, would like to see legislative action on reforming the individual market prior to what is sure to be a difficult state budget debate this fall.

“We’ve had 20-plus months of work on the issue. The issue hasn’t changed. The program has only gotten worse in the individual market,” Hetzel said.

State Sen. Tom George, R-Kalamazoo, and state Rep. Marc Corriveau, D-Northville, chair the Legislature’s health policy committees. They led efforts to study the issues this year and have produced two bills.

Among the key issues in Senate bills 579-582 and House bills 4934-4935:

  • The Senate bills would create a new program called MI Health to subsidize health coverage for low-income households, up to 300 percent of Federal Poverty Level. This year, Federal Poverty Level for an individual is $10,830 and for a family of four, $22,050. This would be paid for by a 1.8 percent tax on claims paid, as well as increase an assessment on hospitals to 6 percent.

  • In the Senate plan, insurance carriers that choose to participate in MI Health plans would be required to accept everyone without regard to health conditions. Right now, commercial group insurance and BCBSM accept everyone, but coverage may be denied or delayed for individuals with health conditions. The nonprofit BCBSM is required by state law to accept everyone, but commercial insurance companies are not.

  • The House bills would levy an assessment on insurance carriers to support a Health Care Affordabilty Fund that would provide MIChild benefits and subsidies for Medicare recipients up to 300 percent of the federal poverty level. The bills demand that all carriers accept anyone, a concept known as “guarantee issue.”

  • Both plans demand payment in lieu of taxes from BCBSM, which Vice President for Governmental Affairs Mark A. Cook said the company would agree to, in particular to pay for improved access to health care, especially for children.

  • While neither plan creates a high-risk pool, both call for assessments on insurance carriers to fund respective proposals for dealing with high-cost claims of at least $25,000.

Corriveau and George have been discussing possible compromises between the two plans, Hetzel noted. “There are components of both packages that are similar, so compromise is acheiveable,” he said.

Cook said individual insurance is about 7 percent of BCBSM’s business and lost $133 million last year.

But Priority Health, the Blues’ main competitor in West Michigan, is in no hurry for state reform, said Leon Lamoreaux, vice president for government programs. He said there are plenty of points in both legislative plans that are viewed as positive by the insurer, which is majority-owned by Spectrum Health and makes up about half of the health system’s anticipated $3 billion in revenue for fiscal 2010.

“What would be the harm in trying to see what may come, allegedly as early as September, from the federal government, and then be able to craft our plans that are in synchronization with the government plan as opposed to something that would be counter to it?” Lamoreaux asked.

“There are a lot of things that most payers really do support in the (state) bills. We can see some good, positive things here,” he said.

Priority Health expects to enter the individual market through its PPO sides, he added.

According to a Michigan Department of Community Health report issued in June, the uninsured rate for 2005-07 for Michigan’s non-elderly adults is 12.2 percent, compared to 17.4 percent nationally. Michigan’s children fared even better, with 5.3 percent uninsured during 2005-07, compared to 11.2 percent nationally.

Deborah Lantzy-Talpos, head of Michigan Markets for Aetna, one of the largest commercial health insurance companies in the state, said her company’s presence in the individual market in Michigan is minimal.  She said her main concern in the state reform movements is access.

Next week: The anticipated area impact of health care reform proposals.

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