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Mackinac Center for Public Policy
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2012 Senate Bill 1293: Repeal BCBS tax exemption; regulate like regular health insurer
  1. Introduced by Sen. Joe Hune (R) on September 19, 2012, to convert Blue Cross Blue Shield into something that would be called a “nonprofit mutual insurance company,” make it subject to the same regulations as regular health insurers, and no longer exempt BCBS from state and local taxes. Under the federal “Patient Protection and Affordable Care Act” (aka “Obamacare”) the BCBS “social mission” of being the “insurer of last resort” which was the rationale for its special tax-exempt status no longer applies, since all insurance companies would be subject to similar "guaranteed issue" mandates.
    • Referred to the Senate Insurance Committee on September 19, 2012.
      • Reported in the Senate on October 17, 2012, with the recommendation that the substitute (S-2) be adopted and that the bill then pass.
    • Substitute offered in the Senate on October 17, 2012, to replace the previous version of the bill with one tha, among other changes, bans BCBS from negotiating anti-competitive reimbursement arrangements with health care providers which prohibit them from giving a for-profit insurance company the same low price BCBS is able to extract due to its dominant position in the market (dubbed "most favorite nation" arrangements). The substitute passed by voice vote in the Senate on October 17, 2012.
  2. Passed 33 to 4 in the Senate on October 17, 2012, to convert Blue Cross Blue Shield into a “nonprofit mutual insurance company” (technically "owned" by the policy holders), make it subject to the same regulations as regular health insurers, and no longer exempt BCBS from state and local taxes. The bill requires BCBS to spend $1.5 billion in accumulated reserves over 18 years to augment government health welfare programs.
    Who Voted "Yes" and Who Voted "No"

  3. Received in the House on November 8, 2012.
    • Referred to the House Insurance Committee on November 8, 2012.
      • Reported in the House on December 5, 2012, with the recommendation that the substitute (H-3) be adopted and that the bill then pass.
    • Substitute offered in the House on December 6, 2012. The substitute failed by voice vote in the House on December 6, 2012.
    • Substitute offered by Rep. Pete Lund (R) on December 6, 2012, to adopt a version of the bill that requires BCBS to contribute more to "Medigap" insurance subsidies for seniors, and prohibits it from entering so-called "most favored nation" agreements with health care providers that allegedly requires providers to charge other insurance companies more for health care services than they charge BCBS (this was the subject of a U.S. Department of Justice anti-trust lawsuit). The substitute passed by voice vote in the House on December 6, 2012.
  4. Passed 61 to 49 in the House on December 6, 2012, to convert Blue Cross Blue Shield into a “nonprofit mutual insurance company” (technically "owned" by the policy holders), make it subject to the same regulations as regular health insurers, and no longer exempt BCBS from state and local taxes.
    Who Voted "Yes" and Who Voted "No"

  5. Received in the Senate on December 6, 2012.
  6. Passed 28 to 10 in the Senate on December 6, 2012, to concur with the House-passed version of the bill.
    Who Voted "Yes" and Who Voted "No"

  7. Vetoed by Gov. Rick Snyder on December 31, 2012.

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