AREA AGENCIES ON AGING ASSOCIATION OF
MICHIGAN
ADVOCACY
ALERT
October 26,
2012
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|
IF
BLUE CROSS BILLS ENACTED - SENIORS
AND PEOPLE WITH DISABILITIES LOSE AFFORDABLE MEDIGAP POLICIES AND GO ON
MEDICAID
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BACKGROUND:
In October, the Michigan Senate passed
Senate Bills 1293 and 1294, which would change Blue Cross Blue Shield from a
state-chartered charitable nonprofit to a nonprofit mutual insurance
company. The rationale is that because
of new protections in the Affordable Care Act (ACA), we no longer need Blue
Cross to serve as the insurer of last resort.
This is not entirely true. NONE
of the new protections in the Affordable Care Act apply to Medicare
Supplemental policies (also known as “Medigap”) – insurance companies will
still be able to reject people with health conditions, or impose pre-existing
condition exclusions. This is why we
need Blue Cross to remain the insurer of last resort for Medicare Supplemental
insurance.
Aging and disability advocates are
focused on three negative impacts of the bills.
The first is the elimination of a
special fund that pays for respite and day care services through the aging
network. This fund, called the “Blue
Cross Escheats Fund,” comes from the Blues’ uncashed checks which revert to the
state treasury. State laws passed in
1990 (Public Acts 171 & 172) earmark those funds for caregiver support
services to keep seniors in their own homes and out of institutions. In FY 2013, this fund will get over $5.5
million. An amendment was added to the
Senate-passed bills to preserve escheats funding.
The second is the impact on the most
accessible and affordable Medicare Supplemental (Medigap) policies offered in
Michigan – Blue Cross “Legacy” policies.
No other Medigap policies or Medicare Advantage plans are as good as
Blue Cross Legacy. Passage of SBs 1293
and 1294 would allow Blue Cross to eliminate these policies in 2016, after a
four-year rate freeze expires. However,
the bills allow Blue Cross – for the first time - to immediately start
rejecting some applicants with pre-existing conditions.
The Blues Legacy policies are
community-rated, do not have pre-existing condition exclusions, have 37% lower
rates because they are subsidized, and any premium increases are subject to state
approval can be challenged by the Attorney General. No other Medigap policy
meets this gold standard. While
insurance companies can reject applicants after an initial 6-month protection
period expires, Blue Cross must accept all applicants, regardless of health
status.
Medicare Advantage plans are also
available to Medicare beneficiaries as an option, but Advantage plans have a
major drawback: while premiums can be lower for Advantage, seniors who need
health care face sizable deductibles and copays that don’t exist with Legacy
policies.
Thirdly, the elimination of Blue Cross
Legacy Medigap has special significance for younger people who are on Medicare
because of serious disabilities. When
seniors first become eligible for Medicare, they have a six-month protection
period in which all insurance companies must sell them a Medigap policy. Federal law requires this. However, federal law does not offer this same
protection to younger people with disabilities when they become eligible for
Medicare. That means that people with
disabilities on Medicare are especially vulnerable, and need access to the
community-rated and affordable Medigap Legacy policies offered only by
Blue Cross. As one example – younger people eligible for
Medicare because of End-Stage Renal Disease can only access coverage through
Blue Cross.
WHAT YOU CAN DO:
Contact members of the House Insurance
Committee and request an amendment to
the Blue Cross bills that would maintain current protections for Blue Cross Medicare
Supplemental (Medigap) policies.
House Insurance Committee
Chair: Pete Lund
(R-Shelby Twp) [email protected] (888) 642-4737
Deb Shaughnessy
(R-Charlotte) [email protected] (855) 328-6671
Paul Opsommer
(R-DeWitt) [email protected] (877) 859-8086
Cindy Denby
(R-Fowlerville) [email protected] (866) 828-4863
Ben Glardon
(R-Owosso) [email protected] (877) 558-5426
Joel Johnson (R-Clare) [email protected] (855) 563-5597
Andrea Lafontaine
(R-Richmond) [email protected] (866) 347-8032
Lisa Lyons (R-Alto) [email protected] (855) 596-6786
Margaret O’Brien
(R-Portage) [email protected] (877) 347-8061
Ken Yonker
(R-Caledonia) [email protected] (888) 347-8072
Roy Schmidt (R-Grand
Rapids) [email protected] (877) 976-4769
Andrew Kandrevas
(D-Southgate) [email protected] (866) 737-1313
Kate Segal (D-Battle
Creek) [email protected] (888) 347-8062
Marcia Hovey-Wright
(D-Muskegon) [email protected] (877)
411-3684
Lisa Howze (D-Detroit) [email protected] (855) 547-2402
Doug Geiss (D-Taylor) [email protected] (888) 737-4347
Here are some talking points:
- The
protections in the Affordable Care Act do not apply to Medigap policies –
insurance companies can still turn away bad risks and impose pre-existing
conditions exclusions. We need Blue
Cross as the insurer of last resort for Medicare Supplemental insurance.
- Blue
Cross Legacy Medigap policies are the most accessible and affordable policies
in the state and must be maintained by keeping current statutory protections in
place. If Legacy policies are
discontinued, some beneficiaries will be forced to drop coverage altogether,
relying on bare Medicare with its high out-of-pocket costs.
- Younger
people with disabilities going on Medicare have no legal protections in
purchasing Medigap and rely on Blue Cross Legacy policies to supplement
Medicare.
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