Mike Cox (R)
LANSING, Mich. (Legal Newsline)- Blue Cross Blue Shield of Michigan has shot back at state Attorney General Mike Cox, saying the Democrat provided the press and state lawmakers misinformation about the company's finances.
The insurer said in a statement that the attorney general incorrectly said Blue Cross Blue Shield used a change in accounting rules to increase projected financial losses on health insurance lines of business.
On Wednesday, Cox called on state legislators to stall legislation sought by Blue Cross Blue Shield of Michigan until the company provides detailed information about its finances.
The Republican attorney general said a day earlier two senior Blue Cross executives admitted to the Lansing State Journal that they incorrectly included a $210-million pension accounting adjustment into projections that it would lose that amount in 2010.
Blue Cross Blue Shield said the AG's statement was false.
"Blue Cross is not calculating pension liabilities into our projections of individual market losses," said BCBSM Executive Vice President and Chief Financial Officer Mark Bartlett. "Our projected losses on individual lines of insurance are more than $260 million for 2009 and more than $300 million for 2010, and our pension accounting does not factor into these projections."
Cox contends that Blue Cross stands to make $2 million on individual market policies in 2010, has asked the Legislature to wait on the legislation until the state's insurance commissioner completes his every three year audit of Blue Cross.
"By Blue Cross' own admission, its claims of huge, immediate losses are false," Cox said Wednesday. "These statements prove beyond a doubt that the legislature must hold these bills until after the current state audit is completed. Only then will we know the truth about Blue Cross' finances."
The Blue Cross legislation seeks to change the way individual health policies are regulated in the state. Blue Cross, which is nonprofit, wants to be regulated more like private insurers, so it may do such things as immediately raise rates rather than have rate increases approved by state regulators.
The legislation would ban so-called cherry picking by private insurers that currently allow them to reject applicants who are considered too costly to cover because they have pre-existing health problems.
From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.