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Examination by National Expert Shows Blue Cross Blue Shield of Michigan's Social Mission Contributions Totaled at Least $391 Million in 2007

LANSING, Jan. 30 /PRNewswire/ -- A report issued today by Avalere Health, an independent and nationally renowned health policy consultancy based in Washington, D.C., confirms that Blue Cross Blue Shield of Michigan contributed at least $391 million to the people of Michigan in 2007 through an array of initiatives that further BCBSM's mission to improve access to health coverage at affordable prices. The $391 million in "social mission" contributions far exceed the $80 million in state and local tax exemptions provided to nonprofit BCBSM under state law.

"Using conservative numbers, and not counting the additional impacts of being insurer of last resort, this examination affirms the depth and breadth of Blue Cross Blue Shield's unique mission," said Andrew Hetzel, BCBSM vice president, corporate communications. "This study confirms that the state's investment of tax free status for BCBSM is returning significant dividends to the people of Michigan -- perhaps far exceeding those delivered in any other state by an independent nonprofit Blues plan.

"This examination makes a clear case for maintaining the Blues' historic role under Public Act 350 of 1980, while also creating a fair system to guarantee access to health insurance that the entire insurance industry is responsible for maintaining for the long-term stability of Michigan's individual insurance market," Hetzel said.

The lead author of Avalere Health's report, Bob Atlas, a senior vice president with Avalere, also examined Pennsylvania's negotiated arrangement with its Blue Cross Blue Shield plan to contribute back to the state in a variety of programs as a condition of its nonprofit status. Avalere's findings reveal that BCBSM contributes 38 percent above the Pennsylvania benchmark.
The examination covers several initiatives unique to BCBSM, including:

-- $15.5 million in costs incurred by participating in public programs,

primarily the MIChild program covering more than 28,000 lower-income


-- $5 million in charitable giving, including community health initiatives

and $1 million toward funding free health care clinics across the state

-- $17.2 million in knowledge dissemination and health care quality

programs affecting the state's population at large, rather than just

BCBSM subscribers

-- $133.8 million in costs due to shortfalls in premiums for individual

products because of a regulatory and rate-setting structure unique to


-- $141.7 million in mandated subsidization of Medicare supplemental and

group conversion coverage

-- $10.8 million to support hospital charity care

-- $66.7 million to assist hospitals in covering "bad debt"

"The return to Michigan taxpayers during 2007 from Blue Cross Blue Shield of Michigan's total social mission spending was at least 488 percent or nearly five times more than its tax exemption," said Atlas. "The Blues spent $391 million in social mission activities versus only $80 million in forgone taxes."

BCBSM commissioned Avalere Health to conduct the examination in December 2007. The report follows up on prior examinations commissioned by BCBSM and conducted by Atlas in 2005 and 2006 through the Ann Arbor-based Altarum Institute.

"Mr. Atlas's examinations of BCBSM are long-standing and continuing, and we have full confidence both in the independence of his approach and his knowledge of the company's finances and statutory obligations," Hetzel said. "It is important to our board and management, and the state, that we regularly confirm that the company is fulfilling its social mission. Mr. Atlas's examinations are one way we do this."

For a copy of the Avalere Health report, go to .

Blue Cross Blue Shield of Michigan is nonprofit and an independent licensee of the Blue Cross and Blue Shield Association.

SOURCE Blue Cross Blue Shield of Michigan
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