September 21, 2009

LANSING -Attorney General Mike Cox today asked the legislature to amend rapidly moving Blue Cross insurance legislation with a "Senior Right to Know" requirement to ensure that Blue Cross subsidiaries inform senior citizens about Medigap health insurance policies when selling their own Medicare supplemental plans.  Medigap is the low-cost Medicare supplemental plan Blue Cross is required by law to sell, which benefits seniors with subsidized costs and rates that are subject to Attorney General oversight.

"Seniors are at risk of paying higher costs under this legislation," said Cox.  "The "Senior Right to Know" amendment will ensure Blue Cross companies make seniors aware of all their options as they make choices between healthcare and other daily necessities."

HB 5235, which passed the House last week and is currently in the Senate Economic Development and Regulatory Reform Committee, would for the first time allow Blue Cross subsidiaries like Blue Care Network (BCN) to sell Medicare supplemental policies similar to Medigap, but without the rate protections or subsidized costs.  Cox fears that without proper notification about low-cost Medigap plans, seniors may be steered instead into the new BCN Medicare supplemental plans.  The end result would be seniors paying more for insurance simply because they were unaware of cheaper options.

In a letter to state legislative leaders, Cox called for the addition of a "Senior Right to Know" amendment to HB 5235.  This would require BCN and other Blue Cross subsidiaries to fully inform seniors about the option of purchasing the low-cost Medigap policy from Blue Cross as they market the new Medicare supplemental plans allowed by HB 5235. 

Blue Cross has a history of hiding Medigap from seniors.  It has other lines of more lucrative insurance, like Medicare Advantage, that do not require subsidies or state approval for rate increases.  Cox noted that his office has received complaints from seniors and insurance agents about BCBSM's deceptive marketing practices relating to Medigap, prompting action in December 2008.  Blue Cross agreed in March 2009, among other things, to display the Medigap option on their website.  However, the plan no longer appears online.

Furthermore, Blue Cross pays commissions on its other lines of health insurance but fails to do so with Medigap.  This has the effect of discouraging sales agents from informing seniors about the cheaper Medigap alternative.

Medigap policies help seniors by filling the gaps in traditional Medicare insurance coverage.  BCBSM is obligated under PA 350 to offer Medigap policies to all Michigan Medicare enrollees and is required to subsidize the plans to ensure affordability.  Additionally, PA 350 gives the Attorney General's office the oversight authority to question Medigap rate increases.  For example, the Attorney General recently won a rate hearing, holding BCBSM to a 4.7% rate increase instead of the 31% Medigap increase they requested.

"Blue Cross has received millions in tax subsidies to help seniors in Michigan," said Cox.  "But with this legislation, the Blues are attempting to evade the legislature's mandate to provide low-cost healthcare for our most vulnerable citizens.  This issue deserves close scrutiny."

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