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Mich. House OKs Blue Cross Blue Shield Overhaul

LANSING (AP) - Blue Cross Blue Shield of Michigan is closer to becoming a customer-owned nonprofit after the Republican-led Michigan House approved legislation Thursday.

Supporters say the legislation, two bills that each passed 92-18, modernizes the insurer and allows it to be taxed and regulated like its competitors. But others, including Republican Attorney General Bill Schuette, say more than 200,000 seniors who currently rely on Medigap, a program included in Blue Cross that covers the expenses not reimbursed by Medicaid, will face skyrocketing rates after 2016.

The bills do not include provisions that prevent insurance plans from covering elective abortions without a supplemental policy, which had been included in similar legislation last year that was vetoed by Republican Gov. Rick Snyder.

The legislation now moves to the Senate, which must approve the House changes, before going to the governor.

Under the legislation, starting in 2014 Blue Cross would shed its charitable "social mission" and contribute nearly $1.6 billion over 18 years to an endowment working to improve public well-being and health care access. The change would also require that Blue Cross pay taxes to state, which the insurer is currently exempt from in exchange for providing insurance coverage regardless of a customer's health.

When parts of the federal Affordable Care Act go into effect in 2014, all insurance companies will be required to provide coverage regardless of customers' pre-existing conditions.

Blue Cross Blue Shield says the bills would allow all insurers in Michigan to compete on the same level and play by the same rules to ultimately benefit consumers.

"Competition will, over the long-term, give Michigan consumers greater choices in health plans at affordable prices because more companies will be competing to earn their business under fair and balanced regulations," Blue Cross spokesman Andy Hetzel said in a statement.

But Schuette and advocacy groups for seniors oppose the legislation, saying it would hurt seniors by causing significant rate increase on those who rely on Medigap coverage.

A freeze on rates for Medigap coverage ends in August 2016. But the legislation allows for $120 million subsidizing Medigap plans for seniors from mid-2016 through 2021.

Schuette said seniors with Blue Cross Medigap coverage in 2016 could face a 66 percent rate increase and that the change could also allow the insurer to stop providing Medigap coverage altogether.

Andy Hetzel, a Blue Cross spokesman, said company believes "the legislation provides extraordinary protection for seniors." He said it ensures Medigap rates "won't increase by one penny for three more years, after which the most vulnerable seniors will continue to receive subsidies."

But those subsidies would be at a much lower rate, said Mary Ablan, executive director of Michigan's Area Agencies on Aging. Schuette said it would not be enough to replace the current $180 million annual subsidy for Medigap coverage.

Rep. Tim Greimel, leader of the Democratic caucus, said he and many of his fellow Democrats voted for the bills despite concerns about their effect on seniors because other provisions in the bills are now necessary due to the passage of the Affordable Care Act, which will set up an online health exchange where people can compare and buy their own insurance plans.

Republican Rep. Klint Kesto of Commerce Township, who voted against the bills, also pointed to the rise in Medigap rates as one of his primary concerns.

© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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