Michigan Votes Forum

Introduced in the House on October 11, 2007, to include references in the law granting tax-free status to Blue Cross Blue Shield to the provisions affecting this non-profit insurer contained in House Bill 5282. Specifically, this would establish a Blue Cross Blue Shield guaranteed issue high-risk pool whose maximum premium price would be capped, and a fee would be levied on other insurers to recoup the cost of insuring individuals in the pool

The vote was 90 in favor, 16 opposed and 4 not voting

(House Roll Call 488 at House Journal 112)

Click here to view bill details.

Blue Cross already must accept all applicatns. This bill is redundant and a waste of taxpayers money. Is Mr. Gaffney on the dole?

Rep. Agema, having reserved the right to explain his protest against the passage of the bill, made the following statement: "Mr. Speaker and members of the House: This package of bills was rushed through the House. I can't vote for something that has not been adequately addressed."

Rep. Emmons, having reserved the right to explain her protest against the passage of the bill, made the following statement: "Mr. Speaker and members of the House: Due to the lack of due diligence through the committee process, I believe voting on these bills today is premature. Legislation of this magnitude requires indepth scrutiny at the committee level to serve the citizens of this state. That scrutiny was lacking and citizens of Michigan expect better of their legislators."

Rep. Alma Smith, having reserved the right to explain her protest against the passage of the bill, made the following statement: "Mr. Speaker and members of the House: House Bills 5282 - 5285 were introduced on October 11, 2007 and 13 days later the full House is being asked to vote on policy that makes extensive, substantive changes to the way both Blue Cross Blue Shield (BCBS) and the Accident Fund will operate. Members not on the committee were deprived of the opportunity for adequate review and it is beyond me why we needed to act in such haste. On fast reading, it is possible that these bills remove BCBS's obligations as the state's insurer of last resort - a very exclusive responsibility and opportunity established in statute. I am concerned that the public's interest is not necessarily served by these changes so I voted against the package. I share the concerns of Consumers Union that this legislation may remove essential consumer protections. Among other provisions, the bill: removes the requirement that rates be approved in advance by the insurance commissioner; eliminates the right of subscribers and the attorney general to challenge rates; allows Blue Cross Blue Shield to maintain 30% of the premium dollars for administration and fund equity - considering that Michigan's Medicaid program operates its administrative functions with 2% of Medicaid dollars that leaves a huge residual for 'profit'; and, allows Blue Cross Blue Shield to limit high risk patients to four unspecified 'guaranteed access' health health plans with no assurances of standards to ensure a reasonable level of coverage. Without these protections it is my concern that consumers will face new obstacles in finding affordable, quality health care."

Rep. Sheen, having reserved the right to explain his protest against the passage of the bill, made the following statement: "Mr. Speaker and members of the House: In 1938 the Blues made a deal in the state of Michigan to be the 'insurer of last resort,' in exchange for tax exempt status and the ability to deal exclusively, (exclusively means that if BCBS is the provider a company cannot have any other insurance provider but them). Thanks to this arrangement in 68 years BCBS has captured 70% of the Health Insurance Market. No other Health Insurance Provider has this large of a percentage of market share in any other state in the nation - the closest Blues market share in another state is 38%. No where in their original charter and mission was there any intention to allow the blues to buy property and casualty companies or any other insurance companies. Blue Cross has non-profit status, but can buy and sell like a for- profit company. They are the Microsoft of the Healthcare industry in Michigan, but unlike Microsoft they are not subject to any of the monopoly or anti-trust laws. The Blues are so dominant in the large to medium markets all the other commercial insurance companies combined control only 10%. These bills will not help competition it will hurt it. I cannot vote for this set of BCBS/Accident Reform HBs 5282 - 5285, because they will drive up the cost of Health Insurance on the citizens of Michigan. Five years ago the Small Group Health Reform drove up the cost of group Health Insurances by adding new regulation and rate band - now they want to the same thing to the individual market. This will drive up the cost of individual Health Insurances, so the Blues can more easily compete. Commercial Insurance Companies and the people will have to bear the cost of this change, which will benefit Blue Cross. If Blue Cross wants to operate like a for profit company then lets make them one and remove their tax exempt status and ability to deal exclusively. California received 3 billion dollars for letting their Blues do what Michigan has allowed them to do for nothing."

Rep. Palmer, having reserved the right to explain his protest against the passage of the bill, made the following statement: "Mr. Speaker and members of the House: I am voting no on this bill because I believe it makes a mockery of the proper committee process and conducive to policy debate and dialogue necessary for good legislation. The comprehensive reform of an issue as complex, and essential, as the individual insurance market demands serious and thoughtful discussion, not a single perfunctory committee meeting and a rushed vote on the floor of this chamber. There may be good reforms in this bill, and there may also be items that could be very deleterious for our state, yet those potential eventualities have not been well documented and vetted in an orderly public process. As representatives of the people, we owe it to them to take a careful look at this complex issue, and not send it through simply based upon the limited analysis we have reviewed thus far. The expansion of the 'for profit' component of Blue Cross Blue Shield of Michigan may end up being good for consumers, as they will have additional options in the care market. The cost of insurance for seniors who have traditionally benefited from subsidized insurance rates may remain unchanged or lower as a result. However, these issues, as well as the proposed reduction of the BCBSM loss ratio, potential changes in administrative costs, and any risk changes to BCBSM reserves, and the ability of other carriers to compete in the market are all questions and issues that are yet unresolved from the perspective of many of my constituents and my own analysis at this time. House bills 5282-5285 will clearly affect the social mission of BCBSM. This vote in no way is meant to reflect upon the mission or the great service that Blue Cross Blue Shield of Michigan has provided to the families of Michigan since 1939, but simply a result of the lack of information and analysis available so far."

Rep. Stahl, having reserved the right to explain his protest against the passage of the bill, made the following statement: "Mr. Speaker and members of the House: BCBS Ind/Mkt Reform Bills No Vote In 1938 the Blues made a deal in the state of Michigan to be the 'insurer of last resort,' in exchange for tax exempt status and the ability to deal exclusively, (exclusively means that if BCBS is the provider a company cannot have any other insurance provider but them). Thanks to this arrangement in 68 years BCBS has captured 70% of the Health Insurance Market. No other Health Insurance Provider has this large of a percentage of market share in any other state in the nation - the closest Blues market share in another state is 38%. No where in their original charter and mission was there any intention to allow the blues to buy property and casualty companies or any other insurance companies. Blue Cross has non-profit status, but can buy and sell like a for- profit company. They are the Microsoft of the Healthcare industry in Michigan, but unlike Microsoft they are not subject to any of the monopoly or anti-trust laws. The Blues are so dominant in the large to medium markets all the other commercial insurance companies combined control only 10%. These bills will not help competition it will hurt it. I cannot vote for this set of BCBS/Accident Reform HBs 5282 - 5285, because they will drive up the cost of Health Insurance on the citizens of Michigan. Five years ago the Small Group Health Reform drove up the cost of group Health Insurances by adding new regulation and rate band - now they want to the same thing to the individual market. This will drive up the cost of individual Health Insurances, so the Blues can more easily compete. Commercial Insurance Companies and the people will have to bear the cost of this change, which will benefit Blue Cross. If Blue Cross wants to operate like a for profit company then lets make them one and remove their tax exempt status and ability to deal exclusively. California received 3 billion dollars for letting their Blues do what Michigan has allowed them to do for nothing."

Senator Clarke, under his constitutional right of protest (Art. 4, Sec. 18), protested against the motion to discharge the Committee on Health Policy from consideration of House Bill Nos. 5282 and 5283. Senator Clarke’s statement is as follows: I oppose us dealing with these issues without a full hearing on this in Health Policy. Just to share with you, this is not a mere technical issue. What is at stake is whether the growing number of people in Michigan will have health care that they can afford. We realize that there are many sectors of our economy that are contracting. Many people, especially middle-aged and middle-management employees, are not only losing their jobs, but, most importantly, they are losing their employer-sponsored health insurance. The only market that is standing between those middle-aged workers who have lost their health insurance and being completely uninsured is the individual market. Currently right now, Blue Cross Blue Shield is absorbing the cost and the loss of covering individuals who pose the highest medical risk in our state. These bills were introduced today. I had 40 minutes to review these bills. We’re talking about a very complicated but also important matter on how we can keep health insurance affordable for people who are losing their jobs here in Michigan. We have one of the highest unemployment rates in the country. What goes along with losing your job is losing your health insurance. So providing individual coverage for individuals who no longer have employer-sponsored insurance is critical. In fact, keeping this insurance affordable is going to be important to how we actually generate new jobs in this state. We need at least more than 40 minutes to review a complex piece of legislation that could impact people who are the most vulnerable right now—those people who have lost their health insurance and need some to cover their families. We cannot deal with this issue on the fly. It deserves our complete and full attention. The committee, due to the thoughtful work of the chair, has been educated over several months about the various policies that impact the individual health insurance market. Our committee is best equipped to make a rational, educated decision on what policy to bring to this floor, yet we have not been able to do that. The very fact that our committee has not been able to agree on these bills shows that we need to air out the issues at the committee level and not bring them directly to the floor. Here’s what I’m saying in essence: We need to take politics out of the health care debate. Let’s focus on the issue. On how we can make this insurance more affordable, the best way to do that is to give the Committee on Health Policy more than 40 minutes to review these bills so that we can do the right thing.

Senator George asked and was granted unanimous consent to make a statement and moved that the statement be printed in the Journal. The motion prevailed. Senator George’s statement is as follows: I’d like to tell you a little bit about how we reached this point in the process that we went through. You will recall that the House held only a single hearing in October on this measure and reported the bill in October. The Senate Health Policy Committee has held nine public hearings on this matter beginning in January. In fact, we’ve explored this matter in great detail. We held a hearing on almost every element of these bills, including a hearing on individual market concepts, a hearing on high risk pools, insurers of last resort, the role of the Attorney General, and the role of the Insurance Commissioner. We held a special hearing on the trends in the individual market, the rating structures used, and the reserves that carriers must maintain. We had a hearing on practices in the individual market where the underwriters taught us about re-underwriting, about rescission, and about closing the books of business. We held a hearing when all three of the competitors in the individual market—the HMOs, Blue Cross Blue Shield, and the commercial carriers—presented their views on their individual market concerns. We held a special hearing which lasted for almost three hours where we heard from citizens and special interest groups. I would especially like to point out that at one of our hearings we invited—at the recommendation of the minority vice chair—an expert from Washington, D.C., who was flown in to educate us about the individual market. So the Senate Health Policy Committee has done very extensive study and work on these matters. I would also point out that the measures before us on final passage, all the elements in the bill before us you have seen before. You have seen them either in my (S-2) or in the good Senator from the 37th District’s (S-3). They are the common elements and the good things that we could call from those two substitutes. You have all seen them, and you have all had a chance to review them and to comment on them. Now, let me tell you a little bit about what is in these measures and why you should vote for this. The health of the people of Michigan is paramount. These measures turn what is otherwise a battle between insurance companies into something that is the benefit of the people of Michigan. They can contain extensive consumer protections. They contain consumer protections that would prevent an insurance company from rating you up when your health condition changes. We have rules regarding rescission. Rescission is the practice where an insurance company might dispute a claim based on how you filled out your initial application at some time in the distant past. We learned that this is occurring in other states and we put protections into the law so that this will not occur in Michigan. We learned about closing the books of business and how that might be used to steer unhealthy clients to one pool or to another. We have protections and rules regarding how carriers would close pools of business. We have very strong and important consumer protections, my friends. We’ve also striven to level the playing field; the playing field between the insurance carriers. We have, as the minority vice chair mentioned, shortened the exclusion for preexisting conditions to six months for people who would purchase commercial insurance. This is an important step forward and would help the people of Michigan. We’ve also called for a study of the individual market and a study on the question of a high risk pool. Is a high risk pool necessary for Michigan? Would it help or would it hurt? It’s uncertain at this time. The committee and this substitute have wisely called for a study of this issue. We have a measure that addresses the mission of Blue Cross—clarifying their mission; calling for them to give us an annual report and how they are meeting their mission to the people of Michigan. We also add two members to the Blue Cross board; one appointed by the Majority Leader, another by the Speaker of the House. Why would we do that? To ensure that they are meeting the mission that this Legislature has given them. Finally and perhaps most importantly, my friends, we have a provision to make the people of Michigan healthier. We have an incentive for those who might buy insurance in the individual market from Blue Cross Blue Shield; an incentive that says that they can get a discount if they smoke less or take better care of themselves. You should be supporting this measure. It’s a good measure that will help keep insurance affordable and accessible to the people of Michigan and help encourage them to be healthy. A vote against this measure is a vote against consumer protection. It’s a vote against people who would develop a medical condition. If you want to help them, this is your chance to do that. I would encourage all of you to support this measure.

Senator George’s statement is as follows: I rise to respond to a statement made Tuesday, May 5, by the minority vice chair of the Senate Health Policy Committee. In his statement, the Senator from the 1st District made four incorrect assertions regarding the Senate changes that were made to the individual health insurance market reform bills, House Bill Nos. 5282 and 5283. The Senator asserted that the changes the Senate adopted would, No. 1, allow insurance companies to retain excessive profits; No. 2, that seniors and the disabled would be excluded from the bills’ consumer protections; No. 3, that a patient with breast cancer or other pre-existing conditions would lose the right to renew coverage; and finally, that the bills created a new six-month waiting period for hospital services. Each of these assertions is incorrect and can be readily refuted. First, regarding the assertion that the changes allow excess profits by insurance companies; in fact, the opposite is true. The substitutes passed by the Senate create a new requirement that all carriers have to demonstrate to OFIS that they have met or exceeded their loss ratio guarantee or provide a refund to policyholders. This is a brand-new provision precisely written to prevent the retention of excess profits. So the Senator was wrong on this point. Secondly, regarding the Senator’s assertion that the seniors and the disabled are not covered by the bills’ new consumer protection mechanism, these protections already exist in current law for Medicare supplemental policies. They are found in Chapter 38 of the insurance code. The new consumer protection measures are expansions of these existing protections to the non-group, non-Medicare supplemental policies in a new Chapter 37a. They include guaranteed renewability and the six-month pre-existing condition exclusion. The protections for the Medicare supplemental policyholder in Chapter 38 remain unchanged. So, once again, the Senator is mistaken. Thirdly, the Senator mistakenly claims that a patient with breast cancer or other pre-existing condition would lose the right to renew coverage. The opposite, in fact, is true. The bills codify the right to guaranteed renewability and prohibit medical underwriting at the time of renewal. These are important improvements in our laws. Finally, the assertion that the bills create a new six-month waiting period for hospital coverage, where there was none before, is also simply incorrect. The current 12-month pre-existing condition exclusionary period for commercial carriers applies to hospitals as well as non-hospital services. The measure we passed shortened the period to six months. The assertion that we somehow prolonged the waiting period for hospitalized services is completely backwards. So all four claims by the Senator from the 1st District are incorrect. I’m not sure where or how the Senator is getting his faulty information. As I have stated before, the measure that we passed contained strong and innovative consumer protections supported widely by consumer and other advocacy groups. And all of these provisions had been distributed to committee members in the weeks prior to the vote. The bills in question came to the Senate last October. We held nine public hearings. The Senator from the 1st District had the same six months to prepare his own proposals that we had. And yet, none were forthcoming. Shortening the exclusion for a pre-existing condition from 12 months to six months is a good idea for someone with a health condition, but apparently, six months was not long enough for this Senator to generate ideas of his own.

Senator George’s statement is as follows: I rise to respond to a statement made Tuesday, May 5, by the minority vice chair of the Senate Health Policy Committee. In his statement, the Senator from the 1st District made four incorrect assertions regarding the Senate changes that were made to the individual health insurance market reform bills, House Bill Nos. 5282 and 5283. The Senator asserted that the changes the Senate adopted would, No. 1, allow insurance companies to retain excessive profits; No. 2, that seniors and the disabled would be excluded from the bills’ consumer protections; No. 3, that a patient with breast cancer or other pre-existing conditions would lose the right to renew coverage; and finally, that the bills created a new six-month waiting period for hospital services. Each of these assertions is incorrect and can be readily refuted. First, regarding the assertion that the changes allow excess profits by insurance companies; in fact, the opposite is true. The substitutes passed by the Senate create a new requirement that all carriers have to demonstrate to OFIS that they have met or exceeded their loss ratio guarantee or provide a refund to policyholders. This is a brand-new provision precisely written to prevent the retention of excess profits. So the Senator was wrong on this point. Secondly, regarding the Senator’s assertion that the seniors and the disabled are not covered by the bills’ new consumer protection mechanism, these protections already exist in current law for Medicare supplemental policies. They are found in Chapter 38 of the insurance code. The new consumer protection measures are expansions of these existing protections to the non-group, non-Medicare supplemental policies in a new Chapter 37a. They include guaranteed renewability and the six-month pre-existing condition exclusion. The protections for the Medicare supplemental policyholder in Chapter 38 remain unchanged. So, once again, the Senator is mistaken. Thirdly, the Senator mistakenly claims that a patient with breast cancer or other pre-existing condition would lose the right to renew coverage. The opposite, in fact, is true. The bills codify the right to guaranteed renewability and prohibit medical underwriting at the time of renewal. These are important improvements in our laws. Finally, the assertion that the bills create a new six-month waiting period for hospital coverage, where there was none before, is also simply incorrect. The current 12-month pre-existing condition exclusionary period for commercial carriers applies to hospitals as well as non-hospital services. The measure we passed shortened the period to six months. The assertion that we somehow prolonged the waiting period for hospitalized services is completely backwards. So all four claims by the Senator from the 1st District are incorrect. I’m not sure where or how the Senator is getting his faulty information. As I have stated before, the measure that we passed contained strong and innovative consumer protections supported widely by consumer and other advocacy groups. And all of these provisions had been distributed to committee members in the weeks prior to the vote. The bills in question came to the Senate last October. We held nine public hearings. The Senator from the 1st District had the same six months to prepare his own proposals that we had. And yet, none were forthcoming. Shortening the exclusion for a pre-existing condition from 12 months to six months is a good idea for someone with a health condition, but apparently, six months was not long enough for this Senator to generate ideas of his own.