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Governor Snyder’s Proposal Latest Step in Modernizing Health Insurance

Plan Transitions BCBSM to a Nonprofit Mutual Insurer

As organizations and businesses adjust to the Affordable Care Act, Governor Rick Snyder continued his proactive approach today, unveiling a proposal to modernize health insurance regulation. The proposal ensures that the state’s largest health insurance provider – Blue Cross Blue Shield of Michigan (BCBSM) – is regulated like all other health insurers as federal health care reforms are implemented.

The regulation comes in advance of the state-federal health insurance exchange which is set to open in October 2013. Currently BCBSM operates under PA 350, which establishes BCBSM as the insurer of last resort. The new federal laws establishing the exchange require that all insurance carriers accept everyone who applies for coverage regardless of their medical history negating the need for provisions for an insurer of last resort.

As part of the Governor’s proposal, BCBSM would transition to a nonprofit mutual insurance company. The transition in corporate structure would not change BCBSM or Blue Care Network (BCN) of Michigan coverage for any of the company’s 4.4 million Michigan members, nor would it affect the contracts the company has to administer coverage and claims for self-insured customers. It also would not affect the contracts BCBSM and BCN has in place with hospitals, physicians and other health care providers.

The Governor’s plan also requires Blue Cross Blue Shield of Michigan to contribute about $1.5 billion over 18 years to a new nonprofit entity whose purpose is to fund initiatives that foster healthier lifestyles, provide better access to health care and improve public health.

Moving forward, the Michigan House and Senate must approve the Governor’s proposal, which follows the Governor’s special message to the Legislature on health and wellness last year.