The Urgent Need for Health Care Reform in Michigan

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As Michigan’s economy continues to struggle, more individuals are left without employer provided health care, and individuals are forced to purchase their own health insurance policies. Under today’s outdated laws, commercial insurers can cherry pick the young and healthy and reject people with health conditions. This blatantly disregards the safety net function that insurance is intended to provide.

Currently, premiums are based on gender and health conditions, and there is nothing to stop insurers from driving up costs on consumers. Michigan’s health care system is broken and needs reform. 

CFAIR coalition members are encouraged by the action taken by the Michigan Legislature to fix our broken and outdated system that is hurting Michigan consumers every day.  Recently, legislation was introduced by Rep. Mark Corriveau (D-Northville) in the Michigan House of Representatives and by Sen. Tom George (R-Kalamazoo) in the Michigan Senate. 

The bills outlined by both the House and Senate address areas that have contributed to Michigan’s broken health care system, which many leaders have acknowledged is in desperate need of reform.

Outlined below are some of the key components of both the House and Senate bills:

Representative Corriveau

House Bills 4934 – 4935

  • Ends gender discrimination against women when determining rates.
  • Expands the safety net for all Michigan residents – including the uninsured - and guarantees everyone has access to all health plans offered by any of the state’s health insurers. This would end the era of the commercial carriers cherry picking the young and healthy and rejecting people based on health status.
  • Requires all carriers to offer three individual plans – a health and wellness plan, a basic benefit plan and an enhanced benefit plan.
  • Creates a more level playing field, which provides a fair, balanced and predictable method for setting rates.
  • Provides for Attorney General and Commissioner oversight on BCBSM rate filings and Commissioner oversight on all other carriers.  Allows rate refunds to be ordered if rates are deemed excessive.
  • Creates a Health Care Affordability Fund within the State Treasury aimed at lowering premiums for, in order of priority, children of low-income families, low-income seniors and low-income individuals.
  • Requires the nonprofit health insurers and HMOs to contribute an amount equal to their tax exemption to the Health Care Affordability Fund, which extends MIChild eligibility and subsidies to Medigap-eligible individuals.
  • Creates a MI Catastrophic Accessibility Protection Plan (MiCAPP) within the treasury to fund reimbursements to health insurers for high cost claims. The fund would cover all health claims over $25,000 for any individuals, and would be regulated by administered by the Office of Financial and Insurance Regulation (OFIR).

Senator George

Senate Bills 579-582

  • Creates the MI-Health program which would subsidize care for low-income residents. Carrier participation in MI-Health is voluntary and would guarantee access to a basic benefit health plan to eligible low-income residents only.
  • Funding for the program would be provided by Blue Cross Blue Shield of Michigan, a tax on claims paid by ASC groups, and the Quality Assurance Assessment Program, which constitutes a tax on hospitals.
  • Except for MI-Health plan, gender would continue to be a rating factor.
  • The plan does not broaden consumer choice because it would allow commercial carriers to continue cherry picking young and healthy consumers.
  • Requires carriers that voluntarily participate in the MI-Health program to offer a basic benefit plan. It does not require insurers to offer comprehensive plans for consumers with costly and complex health conditions.
  • Carriers that voluntarily participate in the MI-Health program will be required to offer a basic benefit plan. It does not require insurers to offer comprehensive plans for consumers with costly and complex health conditions.
  • Maintains the status quo for commercial carriers, allowing them to continue to file and use their rates. 
  • Includes the current file and approval process for BCBSM with shortened timelines, but maintains the current hearings and oversight process.
  • Supports the development of a new Cover Michigan Board to oversee MI-Health.
  • The MI-Health would provide guaranteed access to a basic benefit health plan for eligible low-income residents only. Funding would be provided by BCBSM, a tax on claims paid by ASC groups, and the Quality Assurance Assessment Program, which constitutes a tax on hospitals.

Both proposals

  • Prohibit insurers from drastically increasing rates at renewal due to a change of health status.
  • Limit the waiting period for pre-existing conditions to six months for all carriers.
  • Limit the ability of insurers to rescind, cancel or discontinue health plans for any reason.
  • Provide an independent comprehensive market analysis of competition and health in the individual market by 2010.
  • Each plan supports wellness credits in some form.

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