Blue Cross Blue Shield of Michigan plans to cut as many as 1,000 jobs and seek state approval to raise rates on its individual health insurance products.
Facing more than $1 billion in losses through 2011, the health plan wants to raise insurance rates by 55 percent for nongroup plans, 32 percent for Medicare Supplemental (or Medigap) products and 42 percent for customers with group conversion plans that carry over prior workplace coverage.
BCBS of Michigan claims to have lost $140 million on individual policies last year and expects to lose $320 million this year on those plans.
Approximately 418,000 Michigan residents, about half of which are senior citizens, could be affected by the proposed rate hikes. Michigan's Office of Financial Insurance and Regulation must approve all rate increases.
BCBS of Michigan is the state's largest insurer, covering seven of every 10 insured residents. As a nonprofit, it gets about $80 million a year in tax breaks.
The job cuts announced will be across all divisions of the Blue Cross and Blue Care Network, the health plan's HMO, but will not affect other subsidiaries.
The first 400 cuts will be made in the first three months of this year. Health plan officials estimate that the layoffs and other reductions will save $300 million to $400 million over three years.
BCBS of Michigan also intends to implement 5 percent salary reductions for senior executives and freeze executive pay for the second time in three years. The health plan has 49 vice presidents, of whom eight are senior vice presidents.
BCBS will also freeze the salaries of nonunion workers and request that unionized workers delay a 3 percent pay increase. The health plan intends to cut community programs and lobbying and advertising costs by 25 percent.