Bryan Cohen Mar. 19, 2013, 4:24pm

LANSING, Mich. (Legal Newsline) - Michigan Attorney General Bill Schuette announced his opposition Monday to new laws governing the conversion of Blue Cross Blue Shield of Michigan over concerns of rate increases for seniors.

Public Acts 4 and 5 would allow BCBSM to convert from a charitable healthcare corporation to a non-profit mutual insurance company. Schuette expressed concern that the new laws could negatively impact hundreds of thousands of seniors in Michigan who rely on Blue Cross for Medigap coverage.

"We need a full and complete commitment to seniors, one that protects them from the looming senior cliff, which could cause skyrocketing Medigap rate increases for Michigan's most vulnerable," Schuette said. "When the existing Medigap rate freeze ends in 2016, hundreds of thousands of Michigan seniors will either face higher rates or be left on their own to find new coverage if Blue Cross drops the Medigap plans. That is unacceptable, and as a result, I cannot support laws that open the door for a senior cliff."

More than 200,000 seniors in Michigan currently rely on BCBSM's Medigap coverage. In December 2011, Schuette announced that BCBSM's Medigap rates were frozen for five years as part of an historic agreement.

When the Medigap rate freeze expires in August 2016, seniors covered by BCBSM Medigap policies could face a 66 percent rate increase. Under the new laws, Schuette's office would not be able to negotiate on seniors' behalf for lower rates after the freeze expires.

The laws also allow BCBSM to stop its Medigap policies completely in 2016, which would leave seniors on their own to find new coverage. The new coverage could be more expensive and provide fewer benefits.

A newly-formed foundation allocating an average of $24 million per year for five years will not be sufficient to replace the current $180 million annual subsidy that keeps Medigap affordable for Michigan seniors.

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