by Gongwer News Service
May 15, 2009

With lawmakers focused on one more major impact of the economic downturn, both the House and Senate this week devised differing plans to cover individuals without health insurance.

A Senate Republican plan would raise money to support expanded benefits with assessments on all health insurers and create new assessments on Blue Cross Blue Shield of Michigan. A House Democratic proposal would require insurers to cover people with pre-existing conditions and would ban them from increasing rates if a person got sick.

Under the House plan, insurers also would be prohibited from only covering the healthiest people. So in essence, the Blues would no longer be the only insurer of last resort under both sets of legislation.

The Senate plan, dubbed the MI-Health Act, could potentially cover half of the estimated 1.2 million persons who do not have health insurance or qualify for Medicaid or Medicare, sponsors said when they unveiled the plan.

Still, of the two plans, the House’s is a broader approach that embraces all coverages, not just individuals. Both have versions of consumer protections that limit the ability of insurers to cancel coverage as they incur costs.

In return for elimination of Blue Cross Blue Shield’s status as insurer of last resort, there would be a Michigan Catastrophic Protection Plan that all insurers would pay into based on the percentage of the market they cover. The catastrophic pool would then pay for claims that are more than $25,000. It would be similar to catastrophic claims for motor vehicle accidents that are paid for by the Michigan Catastrophic Claims Association, which is financed by providers of no-fault insurance coverage.

The Democratic plan also calls for expansion of the state’s MIChild program so that every child in Michigan has health care coverage. The plan is paid for by assessing non-profit insurers, namely the Blues, on the value of their tax exemption. Rep. Marc Corriveau (D-Northville) said Blue Cross’ value alone is $100 million annually.

Sen. Tom George (R-Kalamazoo), chair of the Health Policy Committee and who led hearings by a task force on affordability and accessibility, said the Senate’s focus is on how to expand coverage to the uninsured, who are a growing portion of the state’s population as the economy continues to suffer.

He added that the proposal reflects a need in Michigan, where the population is generally rated in lower health than the national average, to make health care affordable and accessible.

“Everybody is being asked to contribute,” Mr. George said. “This is a very bold solution and builds on the existing system. This is a serious problem and now we’re facing a growing number of uninsured.”

Under the Senate plan, Blue Cross would no longer be the only outlet for insurance for those difficult to insure, with all insurers participating in a state-run re-insurance pool to make available insurance covering $25,000–$250,000 year. Costs exceeding $250,000 would again become the responsibility of the originating insurer.

Mr. George said he did not want to start with making health insurance mandatory, as Massachusetts did. But with the subsidized rates making it affordable, he said the question is up for debate. He concluded it would not be helpful at this point until it is proven that an affordable plan is in place.

Mr. George said he expects the plan would blunt the shifting of costs to those who can pay with private funds, government programs or insurance, because more people seeking hospital care would be covered.

Key details are yet to be determined, such as how much a person would pay to get the insurance, the size of the assessments on Blue Cross in exchange for lifting some of the burden of being the insurer of last resort, assessments on private insurance companies (it would be a percentage of claims paid), and how much the quality assessment fee would be raised on hospitals. Medical providers would have to accept Medicare rates to provide care in the program.

Two new programs would be created: MI-Access, providing insurance coverage for individuals at incomes up to 200 percent of the federal poverty level who do not qualify for Medicaid and MI-Coverage, making insurance available for individuals at 200 percent to 300 percent of the poverty level, typically the working uninsured, with subsidies from the assessments on insurers.

The plan also provides cheaper rates based on healthy behaviors such as not smoking or weight control.

Consumer protection provisions include establishing the same six-month waiting period that Blue Cross has to begin coverage of pre-existing conditions for private insurers, who have a 12-month period, limit reasons to cancel policies, and restrictions on closing books to dump patients who become costly.

The bills (SBs 579–582) will have their first hearing in the committee on May 20.

Rep. Corriveau said there are some commonalities between the House and Senate health care plans and he is cautiously optimistic lawmakers can work out their differences.

But he expressed concerns about the Senate package, mainly that it does not have the accountability measures the House’s does to prohibit insurance companies from cherry picking consumers and rejecting sick people. He also said the Senate plan doesn’t expand the MIChild program like the House plan.

Mr. Corriveau said he is holding workgroup meetings with stakeholders starting next week so that a complete product can be put before the House Health Policy Committee.

Mr. George, who said both sides have the same goal, said the House plan is limited by focusing only on Blue Cross and expanding the state program providing health care for children but not adults who would have coverage available in the Senate plan.

Blue Cross Blue Shield said in a statement it was pleased the issue is getting attention but withheld any immediate judgment, a similar move it made when the House announced its plan.

“Our support of any legislation will depend on its ability to strengthen regulations to protect consumers, create a fair and balanced health insurance system and broaden access to quality, affordable coverage,” said the statement. “We’re in the process of reviewing both the House and Senate proposals in detail and look forward to contributing to upcoming discussions that hopefully will result in comprehensive health care reform this year.”

Added Blue Cross spokesperson Helen Stojic: “We’re pleased to see the legislature is taking action on health care reform for Michigan. We hope both the House and Senate proposals aim to comprehensively reform our broken health care system. Our support of any legislation will depend on its ability to strengthen regulations to protect consumers, create a fair and balanced health insurance system and broaden access to quality, affordable coverage.”

David Finkbinder, senior vice president of the Michigan Health and Hospital Association, said any proposal that provides coverage to the uninsured is going to be viewed with interest by a group that now provides care to 1.1 million persons who have no insurance. But he added, “At a time when Medicaid reimbursement has been cut by 4 percent and essentially no federal stimulus money that was intended for health care was spent on health care, the hospital community is troubled by a plan to increase the hospital provider tax as a primary mechanism to fund coverage for the uninsured.”

Mr. Finkbinder said the association appreciates the work legislators are devoting to the problem of the uninsured, and looks forward to participating in discussions to craft a package.

Richard Murdock, executive director of the Michigan Association of Health Plans, said he is pleased both chambers are looking at expanding coverage in a meaningful way. The challenge, he added, is that “these two packages are probably the most complicated ones the legislature will address this year and we’re still looking at the many details involved.”

In a statement, Murdock added: “We welcome a vigorous and public debate on this issue. Once the House legislation is made available, we look forward to reviewing the package closely with our members and partners in the Put Michigan People First coalition. We look forward to working with both the House and the Senate to implement true health care reform.”

Eric Schneidewind, president of AARP Michigan, said the bills would lower the burden on citizens and businesses, as well as deal with uncompensated care that runs upwards of $2 billion a year.

John Sellek, spokesperson for Attorney General Mike Cox, said: “Health care reform is a vital component of Michigan’s recovery, but as we learned last December, the devil is in the details. So, we look forward to learning more about this proposal because any changes must truly protect Michigan consumers.

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