Blue Cross and Blue Shield of Michigan said it would cut as many as 1,000 jobs in 2009 in order to adjust for what it called large and uncontrollable losses on individual policies.
We should not ask our individual subscribers to pay more without first demanding sacrifices from ourselves, said President and Chief Executive Officer Daniel Loepp in a news release.
In the next 60 days, the company will lay off 400 employees, and will consider letting go of another 600 by year-end along with other cost-cutting initiatives, including salary reductions for senior executives, salary freezes for executives and nonunion employees, and requesting that its employees covered under a United Auto Workers contract delay a scheduled 3% pay increase.
The company reported in the release that it bled $140 million on individual policies in 2008 and in 2009 expects to lose another $320 million, a figure that represents a $210 million underwriting loss plus $110 million booked for premium deficiency reserves to cover future losses.
Year-end financial reports are still being audited for 2008, but BCBSM expects to end the year showing a very small gain, or a slight loss, on its bottom line, spokeswoman Helen Stojic said. Given that, projected losses on our individual health plans that could exceed a cumulative total of $1 billion from 2009 to 2011 are simply unsustainable.
Blue Cross and Blue Shield of Michigan has been fighting for legislation that would change state regulations governing individual health insurance, removing some of the states oversight of rate increases and restricting the ability of its for-profit competitors to reject sick applicants. The effort was opposed by Michigan Attorney General Mike Cox, and the bill failed in the legislative session that ended in December.