Michigan Blue Cross: Health Reform Villain or Health System Victim?

As MBCBS's debts mounted, the company strongly supported a measure in the Michigan legislature to spread some of its burden to other insurers by creating a pool among insurers to take on some of the uninsured. The measure, which was debated in December 2008, failed.

"What's going on is the need to create a fair and balanced and equitable situation where all insurance [companies] in the state are held to the same standard," Hetzel says. "Here, the problem is a fundamentally unsustained, bifurcated system, where one carrier [MBCBS] takes on high costs."

Some critics say MBCBS shouldn't have stayed nonprofit all these years, and that has hurt state residents.

Frank Webster, a healthcare advisor for the Mackinac Center for Public Policy, suggested several years ago that the legislature should strip BCBSM of its government protection, and then it would have the same advantages that other plans have, namely more access to capital and flexibility.

In the long run, that would benefit consumers, he wrote. But Hetzel insists the corporation wants to stay as a nonprofit, so it can spend millions for charitable activities, such as subsidizing premiums for senior citizens.

"Blue Cross Blue Shield of Michigan stands at a crossroad. Continuation of the status quo will threaten the affordability of an access to healthcare coverage in Michigan," then-state Insurance Commissioner Frank Fitzgerald told the legislature in 2002. "Indeed, the status quo will threaten the ability of the corporation … to act as the insurer of last resort for individuals who cannot find insurance elsewhere."

"Nothing has changed" since Fitzgerald made that statement, Hetzel says.

For now, MBCBS is one unhappy insurer, blaming what it terms a lousy antiquated system in Michigan for its large rate hikes. MBCBS doesn't see the end of seeking increases for individual insurers.

"We cannot continue to sustain the losses," Hetzel says.