August 13, 2009

LANSING- Attorney General Mike Cox today announced that as a result of his opposition to Blue Cross Blue Shield of Michigan's (BCBSM) interim rate increase request for Medigap insurance purchased by seniors, state regulators allowed only a 4.7% rate increase -- 26.5% lower than the 31.2% increase Blue Cross requested.

"Today is a huge win for Michigan seniors, who are often unable to afford increased costs due to their fixed incomes," said Cox.  "This victory reaffirms the vital role the Attorney General's office plays in protecting consumers from unjustifiably high health insurance price increases."

After filing for a 31.2% increase in Medigap policy rates for more than 200,000 seniors earlier this year, BCBSM also requested an interim rate increase of 31.2% on June 17.  Cox intervened in both the original and interim rate increase cases, arguing that BCBSM could avoid the rate increases by using other financial resources, such as its surplus.

In its decision today on the interim increase request, the Office of Financial and Insurance Regulation (OFIR) ruled that BCBSM should use other resources, such as its surplus, and denied the interim 31.2% increase.  Instead, OFIR allowed only a 4.7% interim increase, saving seniors at least $30 million. 

By agreeing with the Attorney General's argument in the interim case, it is very possible that the same argument will hold true in the on going original rate increase request case.  The next hearing regarding that case is scheduled for September 14^th. 

Cox also said he was pleased that OFIR formally approved last week's reduction in other BCBSM rate increases, which will save families who buy their own health insurance $160 million. 

Mary Ablan, Executive Director of the Area Agencies on Aging Association of Michigan, praised today's results.

"This decision is a major breakthrough in keeping Medicare supplemental policies more affordable in Michigan.  Thank goodness the Attorney General and OFIR Commissioner are looking out for seniors!"

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