Guest column: Blue Cross bills create fears over Medigap

By Mary Ablan/Area Agencies on Aging Association of Michigan

Changing Michigan’s Blue Cross Blue Shield from a charitable state-chartered organization to a nonprofit mutual insurance company will be good for consumers, according to many elected officials and newspaper editors. And the Michigan Senate did improve the legislation for this, compared with the original versions.

But more changes are needed to protect older adults and people with disabilities in our state.    

Their access to affordable health insurance is on the line. After a four-year rate freeze expires, BCBSM would be under no obligation to sell Medicare Supplemental (Medigap) policies that cover out-of-pocket costs for people on Medicare. Blue Cross Medigap policies are unlike any other product on the market. Unlike other Medigap policies, Blue Cross policies are available to everyone on Medicare, regardless of pre-existing conditions. As just one example, they are the only supplemental policies available to people on Medicare by virtue of having end-stage renal disease. These individuals will go on Medicaid if Blue Cross’ policies aren’t available.
 
Some have suggested that the federal Affordable Care Act (ACA) will "level the playing field" and require other companies to provide Medigap coverage similar to Blue Cross. Wrong! ACA does not apply to Medigap. Medigap is governed by prior federal laws, which allow companies to reject bad risks, exclude pre-existing conditions and pursue other consumer-unfriendly practices.

Blue Cross Medigap policies also are unique because they are subsidized to keep the premiums affordable. The current premium of $122/month would be $194/month without this subsidy. Other Medigap policies are not subsidized. (The Senate bills require the subsidy to continue if Blue Cross decides to continue the policies.) Blue Cross Medigap policies also stand alone because any premium increases must be approved by the state, and the attorney general has the power to challenge rate increases on behalf of subscribers.

When Blue Cross requested a 36 percent rate increase for Medigap policies in 2009, Attorney General Bill Schuette challenged this request. The result? The state approved a 4 percent rate increase instead. This protection does not exist for other Medigap policies.

Medicare Advantage plans – privatized Medicare plans offered by insurance companies – have been cited as another option for seniors with Blue Cross Medigap.But Medicare Advantage plans do not provide the same level of coverage as a Medigap plan.
 
Consider a 78-year-old widow who needs surgery when she slips on ice and breaks her hip. She is in the hospital for five days, and a skilled nursing facility for six weeks. With a Blue Cross Legacy Medigap Policy Plan C, her out-of-pocket costs are $0. But with a Blue Cross Medicare Plus Blue PPO Vitality, a Medicare Advantage Plan, her out-of-pocket costs would be between $4,600 and $7,100. All Medicare Advantage Plans have significant deductibles and copayments that come into play when people need services.

Eliminating Blue Cross Medigap policies will result in low-income seniors and people with disabilities being forced to drop Medigap coverage and go on "bare" Medicare or Medicare Advantage with its high out-of-pocket costs. These individuals will be just one illness away from spending their limited income and assets on health care bills and winding up on Medicaid,