Ruling limits Blue Cross rate hike [Detroit Free Press]

Dec. 7--Some 210,000 Michigan seniors with Medigap coverage through Blue Cross Blue Shield of Michigan will see another monthly rate hike Feb. 1, following a decision Monday by Michigan's insurance commissioner to hold monthly increases to no more than a 3.8% increase.The plans, also known as Supplemental Medicare policies, will rise to $111 a month, up from $107 that seniors paid through October.The decision was a setback for Blue Cross, which had sought a 31.2% increase.The ruling by Ken Ross, commissioner of the Office of Financial Insurance, throws out a slightly larger but temporary rate hike he gave Blue Cross in August of 4.7%. As a result, Blue Cross must refund $3.84 to Medigap policy holders who pay the higher rates between October 1 and Jan. 31, 2010. The interim rate hike raised monthly premiums to an average of $112 a month.Now Blue Cross has to figure out how to pay for the rate hike. It could charge employers who do not now pay a 1% subsidy, as allowed by state law, to offset Medigap losses, as Attorney General Mike Cox and others have suggested.Blue Cross said the ruling unfairly targets the company because it would need to pay $181 million to subsidize Medigap policies, though it receives only $90 million in tax breaks as Michigan's non-profit insurer of last resort.Ross agreed with a decision in September by Musette Michael, a Lansing administrative law judge, who said Blue Cross used inflated cost trends to decide its rates. But he disagreed with Attorney General Mike Cox, who filed the challenge, that Blue Cross had to reduce executive and board pay to offset the rate hikes.The ruling has no impact on people with more comprehensive and often costlier Medicare Advantage plans, though insurers have raised many monthly rates for those plans too. Medgap policies typically have no drug coverage, as Medicare Advantage plans do. Medigap policies typically do not have the drug coverage most Medicare Advantage plans offer. Pk/seniors confused. Pat aBlue Cross said it has lost $358 million on its Medigap policies since 2003. No decision has been made about an appeal.Cox said that if bills pending in the legislature sought by Blue Cross were law, Blue Cross would be able to raise rates immediately, subject to later review.But Andrew Hetzel, Blue Cross spokesman, said Michigan's "antiquated regulatory system and unfair competitive playing field are undermining our ability to deliver guaranteed access to affordable coverage for customers over the long term."Contact PATRICIA ANSTETT: 313-222-5021 or [email protected] see more of the Detroit Free Press, or to subscribe to the newspaper, go to http://www.freep.comCopyright (c) 2009, Detroit Free PressDistributed by McClatchy-Tribune Information Services.For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.