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A mixed reaction from Republicans over Snyder's Blue Cross Blue Shield overhaul

Photo courtesy of the Snyder Administration

This week on It's Just Politicsit’s all about the Blues. Blue Cross Blue Shield, that is. BCBS is, by far, the state’s largest health insurance company. It’s also a state government creation; created by state law. It has its own law, separate from all other insurance companies because it is Michigan’s “insurer of last resort,” meaning that Blue Cross has to take everyone who applies. Its mission: to make sure everyone who wants or needs health insurance in Michigan can get it. This means BCBS has to take everyone, regardless of age or pre-existing conditions. Blue Cross says that actually puts them at a disadvantage when it comes to competing with other for-profit insurance companies that can be more selective in accepting - or rejecting - people who apply for coverage.

But, those for-profit insurance companies don’t quite buy those complaints. BCBS has been giving for-profit insurance company executives heartburn for decades. They resent the Blues’ tax exempt status and all of the other advantages that Blue Cross receives. Conservatives, usually conservative Republicans, have steamed about this state government creation competing so effectively in the private sector. But, all of this is about to change… courtesy of Obamacare.

Under the Affordable Care Act, beginning in 2014, every insurance company will have to accept everyone. So, what does that mean for the mission of the Blues?

It's Just Politics with Zoe Clark and Rick Pluta

It changes everything.

This week, Governor Rick Snyder dropped a bombshell when he announced his plan for an overhaul of the Blues. “Times have changed and if you look at where federal law is going in terms of healthcare, it’s getting much more to an open marketplace where, under federal law, [it] will require companies to provide coverage to individuals, regardless of their health condition,” Snyder said. Once again, Michigan’s Republican governor - supporter of Mitt Romney for President - is saying ‘we’re going ahead with plans to work within this federal healthcare law that you - fellow Republicans - promised to repeal.’ The governor’s plan would make Blue Cross a policy-holder owned not-for-profit company that would be governed by the insurance code.

These plans to push Blue Cross all the way into the private sector, which Republicans traditionally have wanted, don’t work without Obamacare and the individual mandate. So, it begs the question: what do you want Republicans? Here we have, yet again, another split within the Republican Party about what to do when it comes to the Affordable Care Act. And, remember how the governor called for the Legislature to move ahead with the online insurance exchanges – Travelocity or Orbitz, of sorts, for people to buy coverage - that passed the state Senate, but stalled in the state House, where a critical mass of Republicans said, ‘No, let’s wait until after the November election.’

Now, the governor’s not putting Republicans into the same box on Blues reform. He says no direct action before the election. But there will be hearings. And the governor does want things to start happening shortly after the election. But, it sort of seems as if Governor Snyder is betting on Mitt Romney – whom he has endorsed - losing in November; betting on Republicans failing to win both chambers of Congress. Well, the governor says ‘not necessarily.’ “I didn’t see the point of waiting. Things could dramatically change in November, but if you look at the normal legislative process, it’s likely this wouldn’t show up on my desk until after the elections,” Snyder said.

For-profit insurance companies are not jumping up and down with glee over this proposal. They say Blues reform that doesn’t give them a better shot at biting off more of the Blues market share isn’t worth it. The overhaul also doesn’t stop Blue Cross from getting into new lines of insurance and competing with even more insurance companies. And, let’s not forget, for the past 50 years, everyone in Michigan whose name begins with “Attorney General” – Republican and Democrat – has made a career out of battling the Blues over rate hikes. The AG loses that authority if Blue Cross becomes just another insurance company. Attorney General Bill Schuette is a free market Republican, but he doesn’t seem to be feeling the thrill on this proposal.

It’ll certainly be interesting to watch this internal conflict for Republicans: in order for the GOP to get what they want - i.e. the Blues becoming just another market player- Obamacare has to stand.

Zoe Clark is Michigan Public's Political Director. In this role, Clark guides coverage of the state Capitol, elections, and policy debates.
Rick Pluta is Senior Capitol Correspondent for the Michigan Public Radio Network. He has been covering Michigan’s Capitol, government, and politics since 1987.
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