Snyder wants BCBS to be nonprofit mutal

LANSING, Mich. (WOOD) - Go. Rick Snyder wants Blue Cross Blue Shield to become an independently-run nonprofit mutual insurance company regulated like all other state health insurers.
 
The governor outlined his plan in Lansing Tuesday morning.
 
Snyder said Tuesday that he seeks to "level the playing field" for insurers and modernize Michigan's "insurer of last resort" that serves 4.4 million residents.
 
Blue Cross officials say it's "not exactly" what it would have proposed but it creates a "fair and balanced set of rules of health insurance."  

Andy Hetzel, vice president of corporate communications for Blue Cross Blue Shield of Michigan, said the state needs insurance regulations to change.  
 
In a release from Snyder's office, the governor's plan will:

• Create a nonprofit funded by Blue Cross, totaling $1.5 billion over 18 years;
• Become a nonprofit insurance company paying an extra $100 million in tax revenue to state and local governments;
• Freeze the Media coverage for senior citizens over the next four years;
• Eliminate the “tax” currently required on Blue Cross’ small-business and individual customers to subsidize other lines of insurance coverage;
• Keep Blue Cross as a carrier of last resort until the totality of the federal health care law kicks in on Jan. 1, 2014.

The plan requires approval by both the Michigan Legislature and the Blue Cross Blue Shield Board of Directors.  
 
BCBS has played by a different set of rules than other Michigan insurance companies since 1980. According to Public Act 350, a state law from 32 years ago, the company doesn't pay taxes and is currently the only insurance company required to accept everyone who applies. The thought process behind that was that everyone in Michigan should have access to health insurance no matter their health.  
 
"They were essentially made the insurer of last resort and had a fairly unique status in our state," Snyder said Tuesday. "Times have changed and if you look at where federal law, in particular, is going in terms of healthcare it's getting much more to an open marketplace. This is an excellent opportunity to say, 'we should update. We should move to the G-string century with our rules and regulations to keep up with that, and actually make sure we have more cost quality and access to health care to our citizens.'"
 
The proposal process starts now because of those changes coming in federal health care. Snyder said introducing it now would allow people to have a discussion before anything goes into effect.  

"I think we've taken it to the right stage to get it out in the public and let people make their decisions and be part of a broader decision making process," said Snyder.  
 
Those federal laws as they're written now would require all insurance companies to accept everyone, regardless of their health -- starting in 2014.
 
When and if that happens, BCBS would no longer fill that unique role in Michigan, the company would become just another insurance company also starting Jan. 1, 2014 if the proposal moves forward.
 
That would mean they would pay about $100 million in taxes each year to state and local governments.
 
"These are very good things going on for us in addition to making them a good competitor in a marketplace where they can grow," Snyder said.
 
A BCBS representative told 24 Hour News 8 Tuesday that the company agrees Michigan insurance regulations are outdated and need to be changed
 
"As with anything, there is the art of compromise," said  Hetzel. "In order to get the fairness and the balance and the regulations that we need to compete, Blue Cross will pay taxes going into the future."

Hetzel said the company will be paying close attention to the governor's proposal as it moves forward.
 
"We want all the insurance companies to play by the same rules and be treated the same way. That's what Go. Snyder is proposing, so this proposal is moving forward in a way that would gain support from the Blue Cross board, but as it moves forward we'll be watching it."
 
Hetzel said coverage would not change, and he didn't think that insurance prices would go up as a direct result of this measure. He did then go on to say that insurance rates do change for a variety of different reasons.

Hetzel said the biggest downside will be if Snyder's legislation does not pass before new federal laws go into effect. He said all Michigan insurance companies, including Blue Cross, would be at a disadvantage if Michigan regulations stay the same and federal laws change. 

The Associated Press contributed to this report.