Health insurers keep 'picking through' rates for businesses

By JESSICA HULETT
Capital News Service
LANSING — Geri Johnson sells health insurance from Blue Cross Blue Shield of Michigan to 95 percent of her customers.
The problem with that is Blue Cross is the insurer of last resort for the state and it must abide by community rating, which allows all small-business groups with fewer than 100 employees to pay the same amount for service, no matter what health conditions are.
Johnson, president of Johnson and Associates Insurance, an agency in Traverse City, strongly supports market reform, which is now pending in the state House. “Rate banding” would require all insurance agencies to set their rates within a range from their highest risk rate to their lowest, allowing consumers to shop around.
“It would bring some stability to Blue Cross over the long term,” Johnson said. “They would get healthier individuals who aren’t as old.
“It’s probably the closest we’ll get to fixing the situation without an overhaul to health care.”
Private insurers continue to pick through businesses, offering higher rates to those with fewer healthy employees and causing them to seek coverage from Blue Cross. Johnson doesn’t think anything will change until businesses get involved and make sure the issue is being discussed.
“How are the employer and the employees going to feel when they find out Joe Employee is diabetic?” she said. “I think Joe Employee has a target on his back.
“This indirectly causes other problems in the workplace, such as discrimination, and you don’t have that with Blue Cross.”
Blue Cross has a coalition in place that is seeking the reform and hopes it will receive attention in 2003.
“There’s a very uneven playing field in Michigan,” said Frank Smith of Suttons Bay, sales manager for Blue Cross in Northern Michigan. “Reform would balance that playing field.”
Blue Cross lost its “75 percent rule” in 1998, which gave a business an insurance policy only if 75 percent of the employees would be covered. Because the rule was dropped, Blue Cross must cover more unhealthy people, increasing costs. Rates have doubled in the past four years by 20 to 25 percent.
“It’s a problem that is somewhat out of control,” Smith said. “Our population is getting older and unhealthier.
“That’s why our rates keep spiraling.”
© 2002, Capital News Service, Michigan State University School of Journalism