Blue Cross Blue Shield of Michigan Answers Attorney General
provided more than 300 pages of detailed financial and membership information
today to
information about
information confirms growth of
and escalating financial losses suffered by BCBSM, the state’s last-resort
insurance carrier, in its individual line of business.
The BCBSM data shows:
Financial losses in individual lines of business — BCBSM lost
million
and expects losses to grow to
to lose nearly
Risk-Based Capital position lower — BCBSM reserves are deteriorating as
measured by Risk Based Capital, fueled by the growing losses in the individual
market. RBC is projected to fall from 627% in 2008 to below 450% by 2011.
When RBC rapidly deteriorates below 600%, the Blue Cross and Blue Shield
Association — the licensing authority that owns the Cross and Shield brands
– may begin a warning and intensive monitoring process. If RBC continues to
drop, this process may conclude with the revocation of the company’s ability
to operate as a licensed Blues Plan.
Membership growth in individual line of business — BCBSM membership
numbers substantiate dramatic growth in BCBSM’s nongroup (under 65) line of
business since 2006. Average BCBSM membership from January through
was 109,707 members, up 95 percent from 56,324 average membership from January
through
Investment portfolio conservative — BCBSM’s investment portfolio
contributed to its financial health through September, due to the
conservative, high-quality nature of investments which have collectively
remained above market benchmarks for return. While BCBSM’s investment
portfolio — like most others nationally — is experiencing fourth quarter
losses, those results were not factored into results that warn of the
company’s falling RBC position. If investment losses are not reversed, the
projected RBC will be worse than forecasted.
Alternative tax burden — The value of BCBSM’s state and local tax
exemption was
2003. However, the financial value to the taxpayers of
nonprofit social mission contributions, which extends beyond serving as the
state’s insurer of last resort, amounts to an alternative tax burden on BCBSM
of
In providing the information, BCBSM complied with a data request included
in the Attorney General’s
CEO
BCBSM has warned policy makers and regulators over the past 16 months that
because of
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.
“
financially,” said
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
residents.”
BCBSM also released a letter from its licensing authority — the national
Blue Cross and Blue Shield Association — that forewarns of the possibility of
the company losing its ability to operate as a Blue Cross and Blue Shield
health plan should its financial strength continue to deteriorate. The letter
from BCBSA chief executive
unmanageable losses in the individual market driven by a difficult legislative
and regulatory structure” as key factors in BCBSM’s financial decline.
Blue Cross Blue Shield of
licensee of the Blue Cross and Blue Shield Association.
SOURCE Blue Cross Blue Shield of