With many of our members being insured by Blue Cross Blue Shield of Michigan (BCBSM) it is important to the Small Business Association of Michigan (SBAM) that BCBSM remains competitive.
The timing is right for SB 1293 and SB 1294 and our and support is based upon how it affects the cost and availability of health insurance in the small group market. Under the Affordable Care Act, BCBSM will shed the designation as Michigan’s “insurer of last resort” and guaranteed issue and guaranteed renewal of insurance products will be in place for all carriers. Without a change in the way it is governed, BCBSM would have a rather large market advantage if they shed the role of “insurer of last resort” and retain their ability to not pay taxes. Inaction would result in a rather large distortion of the market.
The legislation passed today in the Senate creates a competitive marketplace by turning BCBSM into a nonprofit mutual insurer that plays by the same set of rules as other carriers. It also requires BCBSM to pay an estimated annual tax bill of $100 million and has BCBSM contribute $1.5 billion over 18 years to a separate nonprofit organization. During testimony, there were several questions as to how that money will be spent. There is another question that is equally important – where does that money come from? Much of the money that BCBSM holds in reserve has come from the premiums our members have paid. Our concern is that the amount being contributed will raise rates for small business. Further, BCBSM must maintain adequate reserves and any money sent to the new nonprofit has to come from somewhere – small business and other BCBSM fully-insured customers.
We believe that small business customers must have a voice in the new nonprofit and our advocacy efforts paid off – by law the Board of Directors for this new nonprofit will include a seat specific to small business. Further, money sent to this new non-profit must be invested in efforts to lower the cost of coverage. SBAM knows that it would be easy to spend those dollars subsidizing coverage, but that does not make the cost of coverage decrease or make the market work any better; it simply lowers the cost for one or two chosen groups of people at the expense of another.
We would like to see the money sent to this new non-profit invest in programs that will make a real difference in the marketplace. Examples include:
- Invest in an effort to measure the cost and the quality of hospital and ambulatory surgical centers
- Develop a common claim form used by all carriers
- Develop a common IT platform for electronic health records
- Invest in a mandated benefit review commission that would provide legislators with an independent cost benefit analysis of the mandates that are on the books now and any future mandates.
- Study other States’ efforts at public policy related initiatives designed to lower costs and improve quality