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State Senate committee begins examination of Blue Cross Blue Shield overhaul

Blue Cross Blue Shield would undergo major changes under proposed legislation.
Blue Cross Blue Shield building on Lafayette in Detroit.

State Senate hearings began today on a proposed overhaul of Blue Cross Blue Shield of Michigan.

The plan calls for Blue Cross to become a customer-owned not-for-profit corporation that’s regulated just like other insurance companies.

Right now, Blue Cross has to accept all applicants, regardless of their health. Starting in 2014, the Blues’ role as “insurer of last resort” will become unnecessary. Due to the federal healthcare law, insurance companies will no longer be able to reject people because of their health conditions.

Under the plan proposed by Governor Rick Snyder, Blue Cross would have an easier time changing its rates and creating new insurance products.

But it would have to start paying taxes and finance a separate not-for-profit organization devoted to health and wellness.

Dan Loepp, CEO of Blue Cross, says the changes will make Blue Cross more nimble and able to compete in the marketplace under the new federal healthcare law—but without changing its mission. He says the plan does not put Blue Cross on a path to becoming a for-profit insurer. 

“We don’t philosophically believe in for-profit healthcare. I think it’s just another layer that’s a detriment to subscribers,” says Loepp.

But Blue Cross does have some for-profit subsidiaries. Michigan Attorney General Bill Schuette says there should be a thorough, independent audit of all the Blues’ assets and finances before the changeover is allowed to occur.

Rick Pluta is Senior Capitol Correspondent for the Michigan Public Radio Network. He has been covering Michigan’s Capitol, government, and politics since 1987.
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