The policy lesson of BC/BS of Michigan
Blue Cross Blue Shield of Michigan Answers Attorney General
MarketWatch
December 1, 2008
Blue Cross Blue Shield of Michigan provided more than 300 pages of detailed financial and membership information today to Michigan Attorney General Mike Cox to answer his request for further information about Michigan’s individual health insurance market. The information confirms growth of Michigan’s individual health insurance market and escalating financial losses suffered by BCBSM, the state’s last-resort insurance carrier, in its individual line of business.
BCBSM has warned policy makers and regulators over the past 16 months that because of Michigan’s 30-year-old regulatory structure — which allows all other carriers to dump high-risk individuals into BCBSM’s insurance pool without limit or regulation — uncontrollable financial losses on individual policies will escalate and lead to BCBSM’s entire business becoming financially unstable in the near future.
“Michigan’s individual health insurance market is set up to fail financially,” said Mark Bartlett, BCBSM executive vice president and chief financial officer. “It’s a hard truth, especially if you oppose reforming the market, but it is the truth. Unless comprehensive reform is achieved this year, the financial situation will grow into a crisis that threatens health care, the economy and the health insurance safety net for millions of Michigan residents.”
Comment:
By Don McCanne, MD
The individual health insurance market in the United States has presented a policy challenge to those attempting to craft a health care financing system that includes everyone.
In most states, insurers marketing individual plans have slowed the increase in their premiums by selling exclusively to healthy individuals. This is important because it takes only a modest number of individuals with health care needs to drive up premiums to ever less affordable levels.
Now that the momentum is building for truly universal coverage, the policy makers crafting reform are faced with the problem of how to cover those with greater needs largely left out of the individual market. One solution has been to establish high risk pools, but the success with such efforts has been almost negligible. Blue Cross Blue Shield of Michigan provides us with a real life experiment of how disastrous that approach can be. They have been warned that they are at risk of losing their status as a licensee of the Blue Cross and Blue Shield Association.
That brings us back to the fundamental problem that has been stated repeatedly in these messages. If everyone were to be included in the risk pools for private plans, and if the coverage were adequate to prevent financial hardship for those with health care needs, then the private insurance industry is no longer capable of providing us with health plans that have affordable premiums.
The solution? One single, universal risk pool. A single payer national health program: a new and improved Medicare for all.