Statewide Blue Cross insurance rate hikes on individual policies squeeze local workers
Some small startup businesses and independent contractors face pending insurance hikes of over 40 percent in the wake of Blue Cross Blue Shield of Michigan’s decision to raise premiums on its individual insurance plans.
The Detroit-based nonprofit recently sent out letters to affected customers outlining the increases, which average 22 percent effective Oct. 1. Blue Cross has said the rate hikes were unavoidable after losing $133 million last year on individual subscribers and lobbying unsuccessfully for legislative remedies in Lansing.
The rising premiums primarily are hitting workers who lack employer-provided insurance coverage. But they’re leaving some workers, whose pre-existing conditions bar them from obtaining coverage through a private, for-profit insurer, with few alternatives.
“There are short-term policies out there that are available for people, but they have very high deductibles,” said Jennifer Coleman, member benefits director for the Ann Arbor Area Chamber of Commerce.
The issue is reflective of broader problems that are adding fuel to the debate over national health care reform.
Because it is considered an insurer of last resort, the Blues are required to accept all individuals regardless of their health status or any pre-existing conditions. The nonprofit insurer has said that private insurers cherry-pick the healthiest and lowest-cost customers for enrollment, leaving the remaining high-cost customers to the Blues.
"Even with the rate increase, Blue Cross will continue to lose money on its individual products because costs will exceed premiums collected for these individuals," the insurer said in a release. "Our recent rate increases in the individual market underscore the urgent need for health insurance reform in Michigan and the nation.”
Approximately 163,000 purchase non-group or group conversion plans from the Blues.
Pat Anderson, a Realtor with Keller Williams Realty in Ann Arbor, likens the increases to the Blues throwing a “temper tantrum” for not getting its way with individual-market reforms in the Legislature. She received a letter last weekend from Blue Cross outlining plans to increase her premium by 40.52 percent.
That’s on top of a 20 percent rate increase in May, Anderson said, driving her monthly bill for health insurance to roughly $343 - higher than her car payment. She says she still hasn’t gotten an answer as to why her monthly bills keep changing and how her rates were calculated.
“I have yet to get a phone call back,” Anderson said. “They ignore your request. They send bigger bills without any explanation.”
But Carol Grubb, an associate broker and Realtor with Keller Williams, said she understands the insurer’s rationale for pushing through the increases.
“They have to insure everybody,” Grubb said. “I think what’s happened is they’re getting a lot of people that aren’t insurable elsewhere, so the premiums are higher. Do I like it? No.”
Grubb said her rates are set to rise 11.31 percent on Oct. 1, adding to a roughly 10 percent raise passed on in May.
Realtors are often considered independent contractors who work on commission, and therefore aren’t offered coverage by their employers.
Grubb said she’ll likely ask Blue Cross to raise the deductible on the plan that covers herself, her husband and their son. She’s also begun making phone calls to seek out alternate insurance policies, but said one family member’s pre-existing condition would likely complicate things.
“I can’t afford this,” Grubb said. “My rate is now over $17,000 a year. That’s before deductible, that’s before copay. Let me assure you, that’s not a bells-and-whistles plan.”
Anderson also plans to seek out alternate coverage.
“I’m a single person,” she said. “I don’t have alternate sources of income. We all know the realities of the real estate market. I’m not making money hand over fist.”
Coleman said she’s heard from a few people who contacted her in the hopes of joining the chamber and getting a discount through its group coverage program. But the chamber is unable to offer any discounts to members who buy individual policies.
The callers can qualify for the chamber’s group coverage if they have two or more subscribers, Coleman said. Another option would be to purchase catastrophic coverage, but those policies typically pair with high deductibles as well.
But Coleman acknowledges the rate increases leave many subscribers with few options.
“I think it’s going to be an issue,” she said.
• Contact Sven Gustafson by email or follow him at twitter.com/sveng. Staff writer Tina Reed contributed to this story.
Comments
AnnArBO
Fri, Sep 11, 2009 : 2:28 p.m.
Brian, there ARE good ideas, and really bad ideas. I get tired of people swallowing what we were told Wednesday night because they are desperate for help. Offering a 900 billion dollar program, and stating that it will be deficit neutral because we can pay for it by eliminating waste in Medicare and Medicaid is a joke. Not even the CBO or even many common sense democrats are buying into all this hype and salesmanship. Thats why it has stalled. Pushing a position with the defense that nothing is better on the table (which also is not true) does not make a bad plan feasible.
Citizen Al
Fri, Sep 11, 2009 : 12:37 p.m.
I am curious about the "legislative remedies" the Blues were referring to. Do you know what remedies they were seeking? I am an individual subscriber, my wife stays home with our 3-yr. old, we have a baby arriving before the end of the year, and we were hit with a 28% increase. This has been our experience over the past 4 years. Each year we are hit with an increase. I have had 3 different insurers over the past 4 years. If there are efforts in the state legislator that would assist a family like mine then I would like to advocate for those "remedies." It appears that, in part, the Blues are blaming the legislature and at the end of the day consumers are left with the "blues."
Brian Shensky
Fri, Sep 11, 2009 : 10:48 a.m.
@AnnArBO: Sarcasm is a great short term stress reliever. Let's bolster it with good ideas brought to the table.
AnnArBO
Fri, Sep 11, 2009 : 7:48 a.m.
Not to worry. The government is going to fix everything. Its going to be cheaper, better, and totally funded by eliminating waste in the current system. I can't believe that we have not done this sooner, its all so obvious.
JRH
Thu, Sep 10, 2009 : 1:36 p.m.
As an employee of UM, I am preparing for a 44% increase in my monthly premium for the M Premier Care plan. Glad the University was so kind as to increase my salary 1.7%! Thanks UM and BCN.
A2K
Thu, Sep 10, 2009 : 12:02 p.m.
Could someone please do a real investigative report on why MCARE was axed, when it was running in the black, offered superior customer service to both MDs and patients, controlled costs, and had a variety of coverage options...only to be replaced by BCN, which frankly, and bluntly, sucks in every way a health care organization can suck?
Sven Gustafson
Thu, Sep 10, 2009 : 11:23 a.m.
@DagnyJ,Daniel Loepp's $1.6 million salary has been widely reported. @Missy, Staff writer Tina Reed spoke with Blue Cross officials.
Macabre Sunset
Thu, Sep 10, 2009 : 11:12 a.m.
That's terrific. I switched to BCBS of Michigan after my last provider raised rates 40% earlier this year. If you're self-employed, not only do you get screwed by the tax laws, it's extremely expensive to have any health care at all. I carry a $6,000 deductible, or I wouldn't be able to afford it at all. I fully understand why healthy people who do not receive insurance through work choose to roll the dice and not carry any health insurance. But it is a reckless decision. Health care reform, if it's to be realistic, must address the disparity between the self-employed and those whose employers are large enough to create a separate risk group.
Brian Shensky
Thu, Sep 10, 2009 : 10:58 a.m.
I'm going to bite the hand that feeds me, for the greater good. I work for a division of a local public hospital that performs post-procedure analyses and hosts quality improvement initiatives for itself and several other Michigan hospitals. The idea is that sharing outcomes metrics among hospitals encourages competition for increased quality of care, consistently better outcomes and potentially lower costs. Virtually all the projects within said division receive their funding from BCBSM. I question how BCBSM is able to draw a line between these initiatives and a justifiable, tangible containment of health care costs. I beligerently question how BCBSM is able to justify my 33 percent monthly premium rate increase and still justify the continued funding of these soft, so-called quality improvement initiatives. To add further personal insult to injury, this division retains me under independent contract as part of its own cost containment, and considers itself under no obligation to offer me health insurance options from the very organization that funds these initiatives. In these recent rate increases, BCBSM has demonstrated just how defiantly immoral and irresponsible it can be.
missy
Thu, Sep 10, 2009 : 10:46 a.m.
Nice article Sven....did they not respond to BCBS not respond to you?
friend12
Thu, Sep 10, 2009 : 10:16 a.m.
Blue Cross of Michigan is one of the highest cost insurance companies in the nation. Until the state cracks down an outright refuses requested rate increases, they have no incentive to make their company a leaner, cost effective company. There are things I don't like about health reform, but, I think the so called "public option" is needed if for nothing more than to force big blue to compete.
DagnyJ
Thu, Sep 10, 2009 : 10:02 a.m.
Sven, is it true that the CEO of the Blues makes $1.6 million? Could you check that out? I remember a United Way scandal where the CEO was raking in loads of dough and skimping on donations to needy groups.....
Sven Gustafson
Thu, Sep 10, 2009 : 9:01 a.m.
Patrick, You're mixing up the two Realtors I interviewed. One has a $343 monthly bill, the other (Grubb) claims a premium of $17,000 annually for herself and two dependents. But thanks for reading. Sven Gustafson
Patrick Haggood
Thu, Sep 10, 2009 : 8:48 a.m.
I'm not understanding the math here; how is $343/mo = $17,000/yr?
ChrisW
Thu, Sep 10, 2009 : 8:14 a.m.
Blue Cross of Michigan is evil. Their overhead is 3 times higher than it should be for a non-profit. The CEO makes $1.6 million a year and many others make $500K+. They are in bed with the politicians to fleece the public.