Blue Cross Blue Shield of Michigan rate calcualtion critized

a nationally renowned health insurance expert testified at a consumer hearing that Blue Cross Blue Shield of Michigan used flawed, inappropriate methods to determine proposed rate hikes at issue in a consumer challenge.

James Geyer, former chief actuary for Aetna Inc., said BCBSM methods resulted in a substantial overstatement of its losses from its individual health insurance policies purchased by individuals without employer sponsored coverage, participation in these policies is growing as employers drop workplace health insurance benefits.

BCBSM earlier this year sought a 24% increases, on average, for these individual health insurance policies. Blue Cross was granted a 10% interim rate hike, which took effect June 1. The rate hikes affect roughly 19,000 people in 7 Blue Cross individual health plans. Blue Cross says the rate hikes are needed to offset losses in the individual health business, which totaled $52 million over 10 years.

If BCBSM had performed a more precise analysis of growth in the value plans the insurer would either break even or make $1.3 million, Geyer said, instead of incurring as much as $13 million in losses from the lines of business in question.