Affordable Care Act and Insurers of Last Resort

From the Detroit News, 9/12/12:
Gov. Rick Snyder says his plan to reform Blue Cross Blue Shield of Michigan would make health care more affordable and improve health, but it was met Tuesday by resistance from other insurers, the state’s attorney general and a consumer group.
Snyder’s proposal would convert the state’s largest health insurer into a mutual insurance company owned by its members, end its special exemption from state taxes and make it comply with state rules that other insurers must meet.
This reminds me of BCBS of NW Ohio, which became Medical Mutual. They gave up not-for-profit status to go mutual, and, unlike Michigan (at least so far), gave up the Blue Brand. Surprisingly, they have remained a mutual company and not gone the rest of the way to stockholder ownership.

If the economy in Michigan turns around, and people start moving to Michigan instead of away, I could see BCBSMI going for-profit. Until then, I would expect their stock would fare worse than Facebook.

I do expect the exchanges to generate a trend among Blues to try to shed their “insurer of last resort” role. They will compete better outside the exchanges if they can get the exchange plans, including their own, to carry the last resort risk. Sort of like bad banks and good banks dealing with toxic assets. This would be another step in the process of turning the exchanges into high risk pools. Health insurance will continue to be a game of Old Maid until everyone operates by the same set of rules. I’m thinking Medicare for all, with MA at the center, but we’ll see.

That would also fix the biggest problem with Ryan/Wyden: the GDP+1 cap on the vouchers to buy Medicare plans will shift more costs into the commercial sector, which has no such cap. If the Medicare and commercial sectors merge, that problem goes away.