Blue Cross, rivals spend big money to influence lawmakers
Friday, February 29, 2008        16:46 EST

Lansing, Michigan - Few organizations spend as much money courting state lawmakers as Blue Cross Blue Shield of Michigan.

But it isn't just the $2.4 million that Blue Cross has spent lobbying state officials since 2001 that makes it a major player in state politics and policy.
It's also the company's unique health care mission and its sheer size. The Detroit-based nonprofit organization covers almost half the state's population and controls more than 60 percent of Michigan's health insurance market.

Blue Cross rivals are increasing their own spending as hotly contested bills changing how prices and rates are set in Michigan's growing individual health insurance market move through the state Legislature. One such group, the Michigan Association of Health Plans, has spent more than $749,000 lobbying since 2001.

Blue Cross spending ranks second only to the Michigan Education Association among single-issue organizations registered as lobbyists in the state since 2001. Blue Cross spent more than $412,000 lobbying state government officials in 2007, according to a review of state records posted electronically by the Michigan Secretary of State.

In addition, Blue Cross's political action committee has contributed to the campaign committees of every one of the Michigan Legislature's 148 current members at some point in their political careers. More than 80 percent of them got money in 2006.

The PAC money, which flows to both Democrats and Republicans, does not come from company revenues but is contributed by its employees. Blue Cross describes the PAC as having a "bipartisan, nonpartisan" approach.

It often ranks among the top 10 or 20 PACs when it comes to raising money, according to the nonpartisan Michigan Campaign Finance Network.

"Our PAC represents the collective conscience of our employees," said Mark Cook, Blue Cross's vice president of government affairs. "Our employees understand that we are a heavily regulated company and that being engaged in the political sphere is important to them and their collective future."

Gary Wolfram, a Hillsdale College economist commissioned by Blue Cross opponents, said the donations reflect that Blue Cross's role is largely shaped by state statute - and lawmakers are the ones who can change it.

"Their whole existence depends on the government," Wolfram said. "Anything they do depends on the government."

Blue Cross gets state tax breaks in exchange for a mission of making health care more affordable and accessible as Michigan's insurer of last resort. In addition to changes in the state's individual insurance market, Blue Cross also wants changes in state law to allow its subsidiary, The Accident Fund, to expand from worker's compensation products into other lines such as auto and life insurance.

Blue Cross political expenditures have climbed in recent years, but that's not unusual. Overall lobby spending in Michigan - reported at more than $32 million in 2007 - is up 37 percent since 2002.

"That's just a reflection of how public policy is formed these days in Michigan, and indeed America," said Rich Robinson, executive director of the Michigan Campaign Finance Network.

Robinson estimates Blue Cross has spent about $1.5 million running television ads about pushing for passage of the legislation pending in the state Senate. Rivals haven't advertised as much, but more could be coming as the bills work their way through the Legislature. Bills have passed the House and are pending in the Senate.

In 2006, Blue Cross reported spending more than $16 million on marketing and advertising overall. Company officials say many of their competitors spend more on a per-member basis.

But it's not just campaign donations and advertising that makes Blue Cross a formidable force in Michigan politics. The nonprofit has played a pivotal role in Michigan health care for decades and now has policies covering about 4.7 million Michigan residents.

The company's 35-member board of directors - with a makeup generally outlined by state law - is culled from some of Michigan's most powerful organizations and represents many of its customers. It includes representatives from General Motors Corp., Ford Motor Co., Chrysler LLC and several smaller companies. Labor is represented with members from the United Auto Workers, the Michigan AFL-CIO and the Michigan Education Association. Health care providers, including doctors and hospitals from across the state, a

lso are on the board, along with some public members.

Attorney General Mike Cox doesn't like the Blues bills as they passed the House. He has been sharply critical of a provision that would take away his office's role in rate challenges and has questioned how Blue Cross uses its financial surpluses, now hovering at about $2.8 billion.

Like the majority of Michigan's state-level office holders, Cox has received campaign donations from Blue Cross. While acknowledging its historically crucial role in Michigan health care, he says the Blues "carry a big stick here in Lansing" and that being out front fighting the bills has been "a bit daunting."

Many Blue Cross rivals are among those fighting the company's latest plans. Many of their PACs and lobbying efforts have become more active.

Aetna Inc. spent $37,664 lobbying in 2007 but hardly lobbied at all in Michigan until a few years ago. United Healthcare and Amerisure Mutual Insurance Co. are among the other opponents of the Blue Cross bills that began making significant lobbying expenditures only within the past year or two.

Linda Teeter, executive director of Michigan Citizen Action and a supporter of the bills, points out that some of the companies criticizing the Blue Cross surplus are for-profits with overall revenues that dwarf the Michigan company's. Blue Cross spokesman Andrew Hetzel calls some of the opposition's claims "unbridled hypocrisy."

The AARP, which spent $279,400 on lobbying in Michigan last year, opposes the House-passed plan. The group says the plan could hurt consumers. But supporters of the legislation note the AARP has a vested interest, too, because it helps market certain insurance plans sold by United and Aetna. The AARP counters that it does not consider itself a Blue Cross competitor and it does not endorse United or Aetna's entire product line.

The United Auto Workers has concerns about some provisions in the bills, which puts Blue Cross in a delicate position because the labor union is well-represented on its board of directors.

Cook says the UAW's concerns are different than those of rival insurers.

"One thing we agree with the UAW on is the market place is broken and needs changes," Cook said. "We may not agree on the exact form that change should take, but I think that's part of the healthy discussion that will go forward here."

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Associated Press writer David Eggert contributed to this report.

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On the Net:

Michigan Legislature: http://www.legislature.mi.gov/

Blue Cross Blue Shield of Michigan: http://www.bcbsm.com/

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