2012 Senate Bill 1293

Repeal BCBS tax exemption; regulate like regular health insurer

Introduced in the Senate

Sept. 19, 2012

Introduced by Sen. Joe Hune (R-22)

To convert Blue Cross Blue Shield into something that would be called a “nonprofit mutual insurance company,” make it subject to the same regulations as regular health insurers, and no longer exempt BCBS from state and local taxes. Under the federal “Patient Protection and Affordable Care Act” (aka “Obamacare”) the BCBS “social mission” of being the “insurer of last resort” which was the rationale for its special tax-exempt status no longer applies, since all insurance companies would be subject to similar "guaranteed issue" mandates.

Referred to the Committee on Insurance

Oct. 17, 2012

Reported without amendment

With the recommendation that the substitute (S-2) be adopted and that the bill then pass.

Substitute offered

To replace the previous version of the bill with one tha, among other changes, bans BCBS from negotiating anti-competitive reimbursement arrangements with health care providers which prohibit them from giving a for-profit insurance company the same low price BCBS is able to extract due to its dominant position in the market (dubbed "most favorite nation" arrangements).

The substitute passed by voice vote

Passed in the Senate 33 to 4 (details)

To convert Blue Cross Blue Shield into a “nonprofit mutual insurance company” (technically "owned" by the policy holders), make it subject to the same regulations as regular health insurers, and no longer exempt BCBS from state and local taxes. The bill requires BCBS to spend $1.5 billion in accumulated reserves over 18 years to augment government health welfare programs.

Received in the House

Nov. 8, 2012

Referred to the Committee on Insurance

Dec. 5, 2012

Reported without amendment

With the recommendation that the substitute (H-3) be adopted and that the bill then pass.

Dec. 6, 2012

Substitute offered

The substitute failed by voice vote

Substitute offered by Rep. Pete Lund (R-36)

To adopt a version of the bill that requires BCBS to contribute more to "Medigap" insurance subsidies for seniors, and prohibits it from entering so-called "most favored nation" agreements with health care providers that allegedly requires providers to charge other insurance companies more for health care services than they charge BCBS (this was the subject of a U.S. Department of Justice anti-trust lawsuit).

The substitute passed by voice vote

Passed in the House 61 to 49 (details)

To convert Blue Cross Blue Shield into a “nonprofit mutual insurance company” (technically "owned" by the policy holders), make it subject to the same regulations as regular health insurers, and no longer exempt BCBS from state and local taxes.

Received in the Senate

Dec. 6, 2012

Passed in the Senate 28 to 10 (details)

To concur with the House-passed version of the bill.

Vetoed by Gov. Rick Snyder

Dec. 31, 2012