Washington, DC - Congressmen John D. Dingell (D-MI15) and Sander Levin (D-MI12) have questions for Blue Cross Blue Shield of Michigan President and CEO Daniel J. Loepp about a series of rate hikes the company announced late last week.  Blue Cross Blue Shield of Michigan plans to hike monthly premiums for 163,000 Michigan citizens who buy the insurer's nongroup or group conversion plans on average by 22 percent.  Blue Cross will also increase supplemental Medicare policies, known as Medigap, held by about 210,000 Michigan seniors by an average of 4.7 percent.  Blue Cross had requested an average 56 percent hike for its nongroup plans and 41 percent for its group conversion policies.

“We've had hundreds of medical bankruptcies across our state and these increases threaten to put more families in danger.  We are facing a disaster,” said Congressman Dingell.  “Unless we reform the system, people are going to have to choose between health insurance and a home.  And it doesn't sound like this is the end of the increases - I've seen that some people enrolled in nongroup policies could see their monthly premiums rise from 4.5 percent to 28 percent. At the same time, monthly rates on group conversion plans could rise between 4.3 percent and 40 percent.  This makes the case for the need of comprehensive health insurance reform like we have in H.R. 3200-health reform legislation being considered in the U.S. House of Representatives.  H.R. 3200 will drive down the costs of health insurance by creating competition, reducing waste, fraud and abuse that contributes to increased costs, and instituting new rules that will force insurance companies to compete on the basis of price and quality, not by denying coverage to people with pre-existing conditions or taking away policies when someone gets sick.  Without it, increases like this one could lead to across the broad increases for all plans including many not involved in the current rate increase.”

“These rate increases show exactly why the status quo for health care is unsustainable. Families cannot continue to endure these kinds of spiraling costs,” said Rep. Levin. “Today we are requesting the facts to better understand the particular reasons why Blue Cross is raising its rates, but we all know the general reasons – health care costs rising out of control and too little competition in the Michigan insurance market. These increases demonstrate the urgency of the health care reform proposal we are working on in Congress, which would bring down costs in part by simplifying billing paperwork, increasing competition, and prohibiting insurers from charging more based on pre-existing conditions.”

According to published reports, the Blue Cross plans and the increases include:

• Young Adult Blue PPO (nongroup) was $47.14; increases 4.5 percent to $49.30
• Individual Care Blue PPO, ages 40-44 (nongroup) was $230.30; increases 28.2 percent to $296.67
• Traditional Option C (group conversion) was $233.60; increases 24 percent to $289.75
• Medigap Plan C was $107.09 a month; increases 4.7 percent to $112

Below is the letter sent by the two Members to Mr. Loepp:

Daniel J. Loepp
President and Chief Executive Officer
Blue Cross Blue Shield of Michigan
600 East Lafayette Boulevard
Detroit, Michigan 48226-2998

Dear Mr. Loepp:

We are writing to inquire about recent health insurance premium increases requested by Blue Cross Blue Shield of Michigan and its affect on Michigan consumers. 

According to recent news reports, Michigan insurance regulators approved Blue Cross Blue Shield of Michigan’s request last week to increase the rates for about 163,000 people who buy nongroup or group conversion plans by an average of 22 percent.  The approved rate increase is lower than the original request for an average 56 percent increase for nongroup plans and 41 percent for group conversion plans.  Additionally, Blue Cross Blue Shield of Michigan recently won approval for an average 4.7 percent interim increase on its Medigap policies, which cover approximately 210,000 seniors.  Unfortunately, this is not the end of the bad news for Blue Cross Blue Shield of Michigan beneficiaries.  News accounts report that Blue Cross Blue Shield of Michigan will continue to seek its original request of an average 31 percent rate increase on three Medigap plan options.

We are currently working in Congress to make changes to the health insurance system that would bring down the cost of insurance for all Americans.  These changes include simplifying billing paperwork and prohibiting insurers from charging more based on pre-existing conditions.  In the current economic environment, health insurance rate increases are the last thing Michiganders should be forced to deal with today.  Faced with one of the worst economic situations in American history, Michiganders are being forced to pay more while their wages remain stagnant and in many cases are disappearing.  From 2000 to 2007, employer sponsored annual health insurance premiums rose from $6,817 to $12,151, an increase of $5,334 or 78.2 percent. Over the same period, the median earnings of Michigan’s workers increased from $25,910 to $27,096, an increase of $1,186 or 4.6 percent.  Health insurance rate increases continue to strain American consumers and will put access to health care further out of reach.  An average of 504 people are losing health insurance in Michigan every day.  These rate increases have the potential to force more and more families to make tough decisions that no one should be forced to make—whether they pay the mortgage or utility bill or pay health insurance premiums.

In order to gain a better understanding of the need for the approved and any future rate increases, we respectfully ask for your response to the following questions:

1. What percentage of the recently approved rate increase (individual and Medigap) will directly go towards actual medical costs for Blue Cross Blue Shield of Michigan beneficiaries?
2. What is the basis of Blue Cross Blue Shield of Michigan’s decision to forgo using its $2.4 billion surplus to offset rate hikes?
3. Will any health benefits currently available to the holders of the policies affected by the rate increases be cut or adjusted in any way?
4. What is Blue Cross Blue Shield of Michigan’s current medical loss ratio?
5. Does Blue Cross Blue Shield of Michigan plan to seek additional rate hikes in the near future, either in these or other markets?
6. If so, what segment of your beneficiary population will be impacted and how high would the rate hike request be?
7. For each employee or officer who was compensated more than $500,000 in the past five years what is the total value of compensation the individual received in each year, and the annual value of each of the following components of the individual’s compensation: a) salary and b) bonus?

A response to this letter by September 2, 2009 would be greatly appreciated.  If you have any questions, please contact Virgil Miller or Katie Campbell with Rep. Dingell’s office at (202) 225-4071, or Jocelyn Lippert with Rep. Levin’s office at (202) 225-4961.

Sincerely,

 
John D. Dingell                                               Sander Levin
Member of Congress                                    Member of Congress

 

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