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Commentary: Understanding Blue Cross

Whatever else you think about Governor Rick Snyder, you can’t say he has failed to be bold. He has made or tried to make some stunning changes in the way Michigan works in a little over a year and a half in office. Yesterday, he did it again.

He unveiled a plan to dramatically change the health insurance landscape in Michigan by changing the way Blue Cross/Blue shield does business. He would convert it from its current official status as a charity to a nonprofit mutual company over the next fifteen months.

Blue Cross, by far the state’s biggest health insurer, would no longer be required to provide insurance to people who couldn’t get it anywhere else. The governor’s rationale is that President Obama’s affordable care act will soon require all insurance companies to provide care to people with pre-existing conditions.

Blue Cross would no longer get the hundred million dollar tax exemption it now enjoys, but it would no longer be under the strict state scrutiny and oversight it now has. Currently, any rate increase the Blues request has to be scrutinized by the state attorney general.

The governor’s proposal would transfer that authority to the Office of Financial and Insurance Regulation, which regulates other health insurance companies.

That would likely make it easier for Blue Cross to increase rates, and speed up the time between any rate request and approval.

Blue Cross would also be required to provide one point five billion dollars to a new independent nonprofit healthcare organization, though it is not clear how that would work.

The governor’s proposal is complex, and raises a number of big questions. Among them: Would this be a good thing for Michigan? What happens if the Republicans win the national elections and repeal the affordable care act, as they have vowed to do? And finally, will the legislature agreed to this?

Frankly, I am not sure of the answer to any of these.  Blue Cross is a complex anomaly in many ways. It is the only charity I have ever heard of which pays its CEO more than three million dollars a year.

The governor says his proposal will get rid of “outdated regulations,“ and create a “modernized, efficient health care marketplace,” which sounds like a good idea. But other insurance companies aren’t so sure. A former regulator told me he fears this will pave the way for Blue Cross to become a for-profit company and start buying up other companies, maybe even diversifying.

Blue Cross denies that. But it is clear that Blue Cross would be able to stop providing some subsidies now required. One woman I know is deeply worried about this. She raised a daughter with spina bifida, and the only place that would provide health insurance for her child was Blue Cross -- because they had to.

What would have become of her otherwise?

Attorney General Bill Schuette, who seems to be competing for power with the governor, doesn’t seem to like this idea either. He would lose his power over the Blues.

This should be an interesting and important debate. The governor seems to think he can get this plan though the legislature this fall. I can‘t imagine that happening before the election.

After that, only time will tell.

Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.

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