Not since Charles Ponzi separated thousands of unsuspecting investors from their life savings with little more than a dapper smile and an empty promise have we seen a more audacious snow job than what’s passing for good public policy in Lansing.
If the public doesn’t see through this sham soon, in as little as just 30 days Michigan will be out billions of dollars in public assets and consumers throughout the state will be at the mercy of an unregulated monopoly. All of this and more is what’s at stake with the pending sale of Blue Cross Blue Shield of Michigan (BCBSM).
Let’s make no mistake about it, BCBSM is being sold. When this process is over the people of Michigan will no longer own BCBSM. And the new mutual insurance company that will own it will have no charitable mission. The mutual company will keep the name, the brand, the good will and virtually all of the money, but otherwise will function like any other mutual insurance company.
Central to the farce being played out in Lansing is the transparently false claim that the politicians are just “transitioning” Blue Cross from a nonprofit charitable organization to a “nonprofit mutual company.” Trouble is, there is no such thing as a “nonprofit mutual company.” You can be a charitable mission nonprofit insurer (like BCBSM) or you can be a mutual insurance company (think Mutual of Omaha Insurance). You cannot be both simultaneously. A nonprofit insurer is owned by the community. A mutual is owned by policyholders.
The reason for this talking point-inflicted subterfuge is so the public doesn’t ask why politicians are selling a public asset estimated to be worth between $6 billion and $10 billion for just $1.5 billion.
In an effort to make sure the public remains in the dark, the deal expressly forbids a fair market valuation from being performed before sale. If you were selling your home or business, wouldn’t you want to make sure you knew how much it was worth before negotiating a final sale price?
Even the $1.5 billion is now debatable. At the last minute an amendment was added to the Senate bill saying the new mutual company would pay only “up to $1.5 billion” and need only make a “good faith effort” to come up with the money. We should all get such generous terms on our business deals.
To his credit, Attorney General Bill Schuette came out initially insisting that an independent fair market valuation be performed. Insider political pressure, however, has since silenced Schuette and he has now agreed to proceed with the sale without one.
Making matters even worse, the Senate-approved legislation deregulates the new BCBSM mutual company so there will be no more attorney general oversight of rate increases. From now on, BCBSM rate increases will go through automatically under what are called “file and use” rules. This prospect should frighten everyone as BCBSM is a functional monopoly controlling 70 percent of the state insurance market.
This plan cheats taxpayers out of billions of dollars that should instead go toward continued charitable good work and unleashes an unregulated monopoly onto unsuspecting consumers. Sound like a good deal? Let the politicians in Lansing know how you feel about it.
Don Hazaert is director of Michigan Consumers for Healthcare, which advocates for health care consumers.