Mich. AG wants more evaluation of Blue Cross deal
DETROIT (AP) — Michigan Attorney General Bill Schuette said Wednesday that he wants a more detailed financial review of Blue Cross Blue Shield of Michigan before giving his blessing to a proposed overhaul of the state's largest insurer.
Schuette told The Associated Press that a proposed independent review that examines whether the plan is fair to Michigan residents is "not adequate." Schuette wants a broader financial evaluation before the insurer changes from a charitable trust to a customer-owned nonprofit, though he said he won't derail the deal.
In exchange for operating as the state's so-called insurer of last resort — meaning it has to provide insurance coverage regardless of a customer's health status — Blue Cross has saved about $100 million in local and state taxes annually. The change proposed by fellow Republican Gov. Rick Snyder and now being considered by the Legislature requires Blue Cross to pay those taxes and contribute about $1.5 billion over 18 years to a nonprofit entity that would take on some of Blue Cross' "social mission" work — improving public health and health care access, particularly for children and the elderly.
"How much money do you put in a foundation?" said Schuette, who is scheduled to testify Thursday before a Senate panel. "Is that the right figure? Maybe it's too low. Maybe that figure should be higher. Whatever that figure is, that needs to be reviewed thoroughly and carefully."
Mark Cook, Blue Cross' vice president of government operations, said during testimony last week that details are still being worked about how the new nonprofit will be governed. But he described the $1.5 billion as an "unprecedented commitment" and one that should provide "sufficient funds to have a good, ongoing stream of revenue."
Cook and Snyder say the proposals aim to "level the playing field" for insurers and modernize Blue Cross, which is governed by a separate state law from other insurers. Blue Cross in Michigan, which serves about 4.4 million residents, wouldn't be sold or lose its nonprofit status but would be regulated in the same way as its competitors. It would join 11 other Blue Cross Blue Shield companies nationwide structured as mutual insurers. Those companies operate in 18 states.
Schuette, who can review and rule on Blue Cross' rate change requests, said he would like to see the same kind of reviews that were performed before he approved the sales of Marquette General Hospital and Detroit Medical Center to for-profit corporations. While he recognizes that Blue Cross is not being sold or losing his nonprofit status, he said the hospital sales also included charitable assets that needed to be transferred.
"We had a measuring stick and an independent, third-party review of the net worth of those two entities," he said. "It was done in a transparent fashion."
Schuette, who last year negotiated with Blue Cross a five-year rate freeze on the Medigap program, which fills the gap in Medicare coverage for seniors, said he also isn't clear on what happens after the freeze expires.
"I think this will all be worked through," Schuette said. "The governor and I have had very thoughtful discussions about this. ... What I'm trying to do is raise what I think are very important considerations for discussion."
Business groups largely support the Blue Cross overhaul, while competitors and advocates for the elderly have urged caution and seek greater clarity in the legislation. The plan requires approval by the Legislature and Blue Cross' board of directors.