The Blue Cross/Blue Shield Bills: Part 3, Now What?

by: rich

Mon May 05, 2008 at 17:15:00 PM EDT

(Third in a three-part series about HB5282, HB5283, HB5284, and HB5285, the four bills that comprise what are known as “the Blue Cross/Blue Shield bills.”)

In two previous posts (part 1 and part 2), I wrote about some of the major provisions in the four bills making their way through our state’s legislature that are backed by Blue Cross/Blue Shield (BCBS) of Michigan.

Last Thursday, two compromise bills dealing with the guaranteed access plan and the rules governing the individual insurance market were passed by the Senate. These bills incorporated elements of two competing proposals: one by Sen. Tom George (R-Kalamazoo) and one by Sen. Allen. The bills give BCBS most of what they want, with the notable exception of the high risk pool. Also, the delay for covering pre-existing conditions will be six months instead of 12.

BCBS is not happy with this.

Blue Cross has spent a year and several million dollars in lobbying and advertising costs for the House bills. Spokesman Andy Hetzel said immediately after the vote that while the insurer was disappointed with the Senate bills, it hopes the House version of the legislation will prevail eventually.

Republican Attorney General Mike Cox opposes the House version of the four bills, saying things like this,

Sen. Allen's bills are a Trojan horse for the House-passed Blue Cross bills that clearly put profits over people.

Mark this date (April 29, 2008) down on the calendar, people: this is the date that a Michigan Republican stated that he was worried that profits are being put before people. He also said this,

Every change in this package of bills is aimed at increasing profits for a benevolent charity that is already making record profits now.

But don’t profits mean more jobs? I thought profit was supposed to be supreme. Aren’t less profits supposed to be a “job-killer,” as the Michigan Chamber of Commerce is so fond of calling anything that might remotely impinge on bottom lines?

Lest anyone claim this is a partisan issue, both the AARP and the UAW have also criticized these bills. And when it comes to campaign donations BCBS does not favor one party over the other. According to the Lansing City Pulse, it has donated to the campaigns of Democrats and Republicans.

Republican, Democrat, the Blue Cross PAC doesn’t discriminate. In 2005-‘06, Blue Cross gave $40,000 to the House Republican Campaign Committee and another $40,000 to the Senate Campaign Committee because both were in the majority at the time. The House Democrats received $36,000 and the Senate Democrats $31,000.

This is the strangeness emanating from these complex bills, bills BCBS claims are sorely needed to reform the individual insurance market and allow it to continue to do business. Some reforms do make sense. For example, it seems reasonable to set a standard loss ratio (the percentage of benefits paid out of premiums collected) for all competitors in the individual insurance market. But I can sympathize with businesses who don’t want their operational costs dictated to them by the state; it would tell them how much profit they can make.

BCBS claims that its for-profit subsidiaries, Accident Fund, help it to cover losses it suffers in it’s non-profit business. BCBS also claims to lose money in the individual insurance market, which is why they want a risk pool, paid for by other insurers, to help it cover the losses they claim they will continue to rack up. 

That it needs for-profits to prop up (in one form or antoehr) its non-profits, begs the question: If the non-profit health insurance business is so unprofitable, why is BCBS in the non-profit health insurance business? The simple response is to call bullshit.

When it comes to its acquisitions, BCBS and its subsidiaries are behaving just as any other corporate entity does in terms of acquiring companies to compliment its holdings and expand its operations. These are the kinds of things companies do to stay competitive and profitable.

Taken as a whole, the House version of the bills would clearly make it easier for BCBS to stay competitive and profitable. One of their for-profit subsidiaries would be allowed to compete in more insurance markets, and the rules that govern the individual insurance market would be tilted in their favor. But this might not be such a bad thing.

Implicit in regulations like specifying loss ratios and limiting rate hikes, and the rest of the code that applies to health insurers, is the idea that Health Insurance (and therefore Health Care) should not be treated as just another commodity like TVs, golf clubs, or shoes. Because it is not just another commodity. That a non-profit is the state’s overwhelmingly largest insurer says something too. BCBS provides health insurance to approximately 70% of the insured market in Michigan. BCBS is not quite a monopoly, but it does dominate the health insurance market.

All of this, the discussion, the countless regulations and conflicting views of the limits and role of our state’s largest health insurer, reflects our collective inability to decide whether health care should be treated as a commodity like any other, or as a right. Neither the current system nor the one envisioned by these bills will ensure that all people in Michigan get the health care they need and deserve. For that, we’ll have to chuck our current system for universal health care. Until then, expect more debates over mind-numbing details about how non-profit and for-profit insurance carriers may or may not conduct business in Michigan.