Fall 2013 News - Analysis

Affordable Care Act

On October 1st, 2013, Americans begin shopping for individual health insurance coverage on new Exchanges or on-line markets that will offer standardized coverage with subsidized premium assistance. The new policies go into effect beginning January 1st and provide consumers with expanded benefits and new consumer protections when dealing with insurance companies and other sponsors of the Exchange products. The launch of this key feature of health care reform under the Affordable Care Act will surely be a bit rocky from an operational perspective, as is usually the case with any technology project of this scope and complexity. Over the summer preceding the start date, the Federal government scaled back some of the more controversial and technically challenging regulatory impacts of the ACA such as the employer mandate penalties and government verification of applicants’ income, employment and health insurance histories collected as part of the application process. While many consumers, employers, insurers and politicians are adopting a wait and see attitude before endorsing or participating in the process, those whom the Affordable Care Act was intended to benefit, the sickest and least insurable Americans, are most likely to be the first customers. All of America will be waiting to see whether the ACA reward and penalties attached to the individual coverage mandate will be sufficient to attract healthier, more desirable risks into the individual and small group health insurance markets to sustain their financial survival over the longer term.

Department of Insurance and Financial Services

In 2013, Michigan Governor Rick Snyder elevated the stature of the Michigan insurance department to a cabinet level position and its name was changed (again) to: Department of Insurance and Financial Services (“DIFS”—which is pronounced “diffs”). This change recognizes the role of the department in both insurance, banking and securities regulation AND economic development of these industries within the state. DIFS is responsible for delivering a partnership model health insurance exchange under the ACA. This means that DIFS retains management over the health plans in accordance with both Michigan law and the ACA, while HHS manages the consumer experience on the Exchange itself.

Blue Cross Blue Shield of Michigan

In other Michigan insurance news, Blue Cross Blue Shield of Michigan, the state’s largest health insurer, is expected to file by the end of 2013, for completion of the process to fully convert its structure and operation from that of a non-profit health care corporation to a mutual insurance company. The change, which has been approved by the Legislature, Insurance Commissioner, and Attorney General, will allow BCBSM to be regulated under the Insurance Code rather than the special and unique enabling acts that have governed its existence dating back to 1939. This will reduce the cost of regulation, while affording greater flexibility to BCBSM to expand its insurance operations.

Michigan Auto No-Fault Case for Statutory Reform

Michigan auto no-fault carriers continue to press their case for statutory reform (reduction) of mandated, unlimited lifetime medical benefits and their impact on premium costs. Consumer advocates are advancing their own reform directed towards achieving more affordable no-fault coverage particularly for drivers in Detroit where the average annual income is $35,000 and the average statutorily required no-fault coverage averages $6000 per yea . On the other side of the debate are the health care providers who deliver the lifetime, unlimited medical care to catastrophically injured auto accident victims and those who are concerned that a reduction in benefits will merely transfer the cost of continued medical care to the State under the Medicaid program.

 

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