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Health insurer, Mich. AG reach Medigap agreement

By Bryan Cohen | Dec 1, 2011

DETROIT (Legal Newsline) - Michigan Attorney General Bill Schuette and a health insurance provider have reached an agreement to continue Medigap benefits to Michigan's Medicare beneficiaries through at least August 2016.

The agreement with Blue Cross Blue Shield of Michigan provides the beneficiaries with deeply discounted premiums for Medicare Supplemental insurance, commonly known as Medigap.

The discounts reduce the premiums for BCBSM's Medigap Plan C by $73 per month from the full rate of $194 per month to $121 per month. The discounts are funded by subsidies collected by BCBSM from Michigan individuals and businesses that purchase Blue Cross health coverage. The subsidies are mandated by the state of Michigan.

In total, BCBSM and its customers subsidize Medigap premiums by more than $180 million every year. This year, BCBSM projects an underwriting loss on Medigap of approximately $220 million that includes the subsidy.

"Affordable health coverage for Michigan seniors is something Blue Cross provides, but it comes with a $220 million cost that is paid by our other customers," said Andrew Hetzel, the BCBSM vice president for corporate communications.

"Blue Cross is expanding our ability to cover vulnerable people in Michigan, and we look forward not only to serving seniors, but also serving growing numbers of Michiganders receiving health care through Medicaid."

Under the terms of the agreement, BCBSM may move forward with an arrangement with Independence Blue Cross to own a minority share of the AmeriHealth Mercy Family of Companies. AmeriHealth is a top-tier, best-in-class Medicaid managed care organization headquartered in Philadelphia. The Blues are seeking to expand their services to Medicaid beneficiaries in Michigan and nationally through the arrangement.

Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensee of the Blue Cross and Blue Shield Association.

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