HHS Secretary Sebelius Takes on Blue Cross Blue Shield of Michigan

Secretary of Health and Human Services Kathleen Sebelius says the health insurance system is broken and must be reformed, citing attempts by a large insurance company in Michigan to raise premiums by as much as 56 percent. Sebelius’ report, “Insurance Companies Prosper, Families Suffer:  Our Broken Health Insurance System”, cited Blue Cross Blue Shield of Michigan for trying to raise premiums on 200,000 people aged between 18 and 64 who have individual, Medicare Supplemental or group conversion policies.  Michigan Insurance Commissioner Ken Ross pared back Blue Cross Blue Shield of Michigan’s request to just 22 percent.Kathleen Sebelius lashes out at insurance companies.

“Premium increases have left thousands of families that are already struggling during the economic downturn with an unpleasant choice between fewer benefits, higher premiums or having no insurance at all.  Hard-working families deserve better,” Sebelius said.

Andy Hetzel, Blue Cross Blue Shield of Michigan’s vice president of corporate communications, took issue with Sebelius’ statement – primarily via Twitter.  Hetzel said the report failed to take into account differing circumstances between states that led to the rate increase request.  “As the insurer of last resort in Michigan, Blue Cross Blue shield covers the costliest population to insure.  That’s because Blue Cross Blue Shield must accept everybody who applies for coverage, regardless of their health status, while commercial carriers can reject applicants deemed too risky.  We have a uniquely dysfunctional problem in the individual market.”

In terms of the HHS report, Hetzel said “They’re painting the industry with a broad brush.  It fails to recognize state-level business issues that the Health and Human Services Department should be aware of.”  Hetzel might be underestimating Secretary Sebelius, who served as Kansas’ insurance commissioner from 1995 until 2003, when she was elected governor.

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