November 28, 2008
LSJ.com
As a 21-year veteran of Michigan government and politics, I have often observed that rhetoric has consequences. Many times, politicians will say things to score political points. Sometimes, those words come back to haunt them.
Attorney General Mike Cox has generated big headlines by waging a campaign against Blue Cross Blue Shield of Michigan. Unfortunately, a logical result of his campaign could be the demise of Blue Cross and the health care security it represents for everyone in Michigan.
Recently, we learned that the attorney general has filed an Exploratory Committee in an attempt to run for governor. I cannot imagine that jeopardizing thousands of Michigan jobs - and putting at risk a health care safety net that only Blue Cross provides - would be a campaign platform that any politician would choose.
Cox is opposing health insurance reform bills working their way through the Legislature. Blue Cross favors reform because the state's 30-year old regulations for the individual health market are no longer working to protect consumers.
Michigan's antiquated system allows for-profit insurers to put all of their "bad risk" - another name for people with costly medical conditions - into the Blue Cross insurance pool. This inherently wrong regulatory scheme is good for companies whose business is to profit off people's health premiums. But it is dragging down Blue Cross financially - to the tune of hundreds of millions in financial losses in the last two years.
Financial losses in the hundreds of millions can't be sustained, even by Blue Cross. Within a few years, Blue Cross reserves will be depleted to dangerously low levels. This is where the very existence of Blue Cross comes into question, not to mention the safety net it provides by spending millions to subsidize low rates for seniors and kids, and serve its role as the state's last-resort insurance carrier.
Separately, Cox has filed a lawsuit against Blue Cross over the ability of its Accident Fund workers compensation subsidiary to own smaller companies in other parts of the country. He has held press conferences to promote the lawsuit, and the headlines are positioning him prominently for his next campaign.
But Michigan consumers benefit from a financially secure Blue Cross, and Michigan jobs benefit from a growing Accident Fund. Bought by Blue Cross from the state government in 1994, Accident Fund is the most successful state agency privatization in history. Based in Lansing, it employs nearly 700 people. And its national success - which is made possible by its ability to own subsidiaries outside Michigan - is promising up to 500 more permanent Michigan jobs, and a new downtown headquarters.
Accident Fund also generated $100 million for Blue Cross in 2007. This is money that Blue Cross didn't have to earn from people's insurance premiums.
Attorneys generally take on big companies under the banner of consumer advocates, but it's hard to see how consumers win if Mike Cox succeeds in making Blue Cross financially unstable and dismantling Accident Fund's job-creating business.
Additional Fact:
John Truscott is executive director of the Coalition for Fair and Affordable Insurance Reform, of which Blue Cross is a member.