Blue Cross Blue Shield of Michigan applauds comprehensive health insurance reforms, prepares for transition steps toward becoming a nonprofit mutual insurer

March 5, 2013

LANSING — Blue Cross Blue Shield of Michigan saluted the Michigan Legislature for completing work today on a bipartisan series of reform measures regulating Michigan’s health insurance market.

Senate Bills 61 and 62 received final legislative approval today.  Originally proposed by Gov. Snyder and supported by overwhelming majorities in the House and Senate, the legislation establishes consistent regulations for all Michigan health insurers and enables the BCBSM Board of Directors to move forward with transitioning the company to become a nonprofit mutual insurer by year’s end.

“This is a landmark achievement for the Michigan Legislature, a legacy accomplishment for Gov. Snyder and a historic opportunity for Blue Cross to serve the people of Michigan well, far into the future,” said Daniel J. Loepp, BCBSM president and CEO.  “This legislation required vision to propose and a deliberate process to modify and approve.  We salute Gov. Snyder, Chairman Hune, Chairman Lund and legislators from both parties for their successful work on these bills.”

As soon as the bills are signed by Gov. Snyder, BCBSM will begin a process of transitioning the company’s structure into a nonprofit mutual regulated under Michigan’s Insurance Code.  This process will take much of the rest of 2013 to conclude, and will involve establishing the legal entity of the mutual company, the merging of the existing company into the mutual, and the drafting of bylaws and governance standards for the new company.

“Blue Cross’ transition process will be driven by our board and management working together,” Loepp said.  “We will communicate regularly with our stakeholders, but these changes will not change their health coverage or their existing business relationships with us.  As a mutual, Blue Cross’ nonprofit social mission will be sustained, as will our commitment to remain based in and focused on Michigan’s needs.  This change will preserve our company’s character, as it has been known for nearly 75 years, which is grounded in our commitment to a healthier Michigan.”

The legislation to be signed by the governor:

  • Requires BCBSM to pay taxes, estimated to total $1.8 billion over the next 18 years.  This includes new local property taxes for many Michigan municipalities, including Detroit, Lansing and Grand Rapids.
  • Enables BCBSM to continue as a nonprofit company, and requires it to contribute $1.56 billion over the next 18 years to a separate and independent nonprofit fund that will invest in programs to improve public health and protect the vulnerable.  This represents a transformation and continuation of BCBSM’s nonprofit social mission.
  • Sustains BCBSM’s commitment to provide an estimated $800 million in subsidies for its Medigap supplemental insurance plans for Medicare beneficiaries through July 2016 – freezing rates in those plans at current levels.
  • Allows BCBSM to be regulated under the same law as its competitors, creating a fair and balanced set of rules for all health insurers in Michigan.
  • Bans “most favored nation” clauses in contracts between hospitals and health insurers.
  • Secures BCBSM assets for the state, with language that guarantees a full valuation of the company in the unlikely event it ever becomes a for-profit company or is acquired by one. More on the content of the legislation is available online at bcbsm.com/news.

Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensees of the Blue Cross and Blue Shield Association. For more news and information go to miblueperspectives.com for more information.

©1996-2014 Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association. We provide health insurance in Michigan.

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