December 9, 2009
In Michigan, Blue Cross proposed to increase the costs of its Medigap insurance for seniors by 36.7 percent. But after intervention by state officials, the Michigan Insurance Commissioner's Office approved a 3.8 percent hike.
"This is great news for Michigan seniors who are often on fixed incomes and unable to absorb higher costs," said Michigan Attorney General Mike Cox, who pushed for the rate reduction. "This is another example of why it is so important for the legislature to protect the powers of the Attorney General's office to question Blue Cross insurance rate hikes."
Cox says the adjustment means that about 200,000 Michigan seniors will save $86 million in the first year alone. The Attorney General's office had intervened in the case after Blue Cross proposed what Cox called an "outrageous increase" earlier this year.
While Blue Cross requested a 31 percent increase for Medigap seniors earlier this year, it recently increased that request to 36.7 percent. The Attorney General's office intervened in the case and argued Blue Cross should not raise rates because it was failing to meet its statutory obligation to subsidize seniors' insurance costs for Medigap policies.
A preliminary decision by an administrative law judge at the Michigan Office of Financial and Insurance Regulation against the huge proposed increase was issued on November 3rd and adopted by the Insurance Commissioner today. In the final order, the commissioner agreed with the Attorney General's argument, saying Blue Cross must subsidize Medigap rates by a full $182 million.
As an example of the cost savings, the current Medigap Plan C monthly rate of $107.09 would have increased by $39.30 per month to $146.39. Instead, under the final order, there will be a rate increase of only $4.07 per month, resulting in a savings of $35.23 per month, Cox said.
