Michigans largest health insurer is under fire from the state attorney general over how it operates its for-profit subsidiaries. And the insurer faces a tough fight in the Legislature as it seeks to loosen state controls on how it operates its businesses.
The not-for-profit Blue Cross and Blue Shield of Michigan is just the latest in a string of Blues insurers nationwide that are under heightened scrutiny for their business dealings and use of their sometimes vast reserves, in addition to court fights on rate hikes and fees.
For the Michigan Blues, the state attorney generals lawsuit, filed July 2, stemmed from a series of legislative hearings this past spring on a package of bills the Blues wanted to expand their business lines.
They overplayed their hand, said Republican state Sen. Tom George, chairman of the Senate Health Policy Committee, who called the hearings.
The package of billsfour in totalpassed the state House in October 2007 with just one hearing and little public debate. But when the bills came up in the state Senate, officials and consumer advocates took notice, and nine public hearings were held over several months.
Essentially, the bills would let the Michigan Blues raise individual insurance rates without state regulatory approval but with later review; create a state-run high-risk pool; allow the Blues for-profit workers compensation company to sell other lines of insurance; and allow the Blues to buy other for-profit businesses, including hospitals and surgery centers.
It was a huge grab, said George, who is a practicing anesthesiologist and former hospice director.
The Michigan Blues says the bills would allow it to stay competitive in a tough market. Weve worked very hard to keep healthcare as affordable as possible, said spokeswoman Helen Stojic. The Accident Fund has been an economic bright spot for Michigan.
The Lansing, Mich.-based Accident Fund is at the heart of the lawsuit brought by Attorney General Mike Cox. The state of Michigan sold the workers compensation company, which was then a quasi-governmental organization, in 1994 to the Michigan Blues with the blessing of the state Legislature.
Under a state law passed at the time, the Blues were allowed to buy the Accident Fund, but could only sell workers compensation insurance and could not use Blues members premiums or other revenue to support the subsidiary. In 2003, the Legislature allowed the Blues to buy other for-profits on a very limited basis.