Cox challenges insurer's rate increase

Keith Loria Sep. 21, 2010, 1:10pm


LANSING, Mich. (Legal Newsline) - Michigan Attorney General Mike Cox announced on Monday that he has filed a motion to intervene and challenge Blue Cross Blue Shield of Michigan's recent rate increase proposal.

On May 21, BCBSM requested a rate increase for Nongroup and Group Conversion subscribers of between 9.9 percent and 15 percent, depending on a person's health plan.

Group Conversion plans cover those who had employer-sponsored care but lost it, while Nongroup plans are those that cover individuals.

"Once again, Blue Cross is seeking to raise costs on people already struggling to buy their own health insurance," Cox said. "It just does not make sense that Blue Cross would raise rates even as their own surplus is growing."

Scheduled hearings on the rate increase challenge will take place this fall in front of an administrative law judge with the Office of Financial and Insurance Regulation. The final decision will be made by the Insurance Commissioner.

If the rate increase happens, approximately 195,000 subscribers will be affected.

Cox is challenging the planned hikes based on the nonprofit insurer's growing surplus and revenues. Since December, BCBSM's surplus has grown by $121 million to approximately $3 billion while the company's net income has increased by $112 million over the same period, Cox says.

Last year, BCBSM sought a similar rate increase, proposing an average 56 percent increase for Nongroup participants and a 42 percent increase for Group Coversion subscribers. Because of Cox's intervention, the increase was reduced to an average of 22 percent, resulting in a $160 million savings.

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