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2012 ANNUAL REPORT Table of Contents Mission of bluesPAC ................................... 1 Message from the Board ............................ 2 2012 Key Issues ........................................ 4 Board of Directors Overview...................... 8 2012 bluesPAC Board Members ................ 9 2012 Financial Overview ..........................10 2012 Statement of Operations ................11 Acknowledgement to our Contributors .....12 2012 PAC Contributors .............................13 2012 Contributions ..................................23 PAC Thank You Notes ...............................28 Mission Statement The mission of bluesPAC is to provide its members with a collective opportunity to be involved in the political process for the good of the organization and the communities it serves by supporting candidates whose political views are closely aligned with those of Blue Cross Blue Shield of Michigan, Blue Care Network, LifeSecure, and the Accident Fund Insurance Company of America. 1 Message from the Board 2012 was an interesting year in terms of politics. During the general election, five republican State House incumbents were defeated by democrats, but ultimately republicans were able to maintain control, winning 64 of 110 seats. Federally, the 2012 election was labeled a victory for democrats who held on to both the White House and control of the U.S. Senate. The Michigan Congressional delegation was slightly shaken due to redistricting and scandal in the 11th district seat. As a result, Republicans walked away with nine of these fourteen seats. As the Michigan legislature began their lame duck session, we were pleased to learn that lawmakers were taking up a plan to modernize Blue Cross Blue Shield of Michigan. This excitement turned to disappointment after the bills passed both chambers, but the Governor exercised his right to veto due to amendatory language that had been added. In spite of the veto, Governor Snyder urged the legislature to act quickly on this issue at the start of the new legislative session. The employees of Blue Cross Blue Shield of Michigan, Blue Care Network, Accident Fund Insurance Company of America and LifeSecure recognized the continued importance of bluesPAC and as such we had another successful year in terms of contributions and participation. We are fortunate to have many loyal members who join bluesPAC year after year. We are also grateful for those employees who joined for the first time in their career this year. It is only with your support that we can fulfill our mission. Thank you for a wonderful 2012! 2 3 2012 Key Issues On the state level over 350 pieces of legislation were introduced in 2012 with the potential to impact Blue Cross Blue Shield of Michigan and its subsidiaries. The Governmental Affairs and Public Policy teams, in a joint effort, along with subject matter experts throughout the enterprise, were able to analyze and formulate positions on each piece of legislation. Consequently, BCBSM was able to work closely with policymakers to block and/or amend legislation with potential negative impacts to the enterprise. A few of the key state legislative issues for 2012 include: • BCBSM would be regulated under the same law as its competitors, creating a fair and balanced set of Governor Snyder’s Proposal to Modernize rules for all health insurers in Michigan. Blue Cross Blue Shield of Michigan On September 12, 2012 Governor Rick Snyder Additionally, language was added in the House Insurance announced his plan to modernize Michigan’s health Committee last year, which included provisions sought insurance regulations. Shortly following that announce- by Blue Cross’ competitors, consumer groups and ment Blue Cross Blue Shield of Michigan began testifying advocates for older adults. These included: before the Senate Insurance Committee on the proposal • Language that would prohibit BCBSM from by Governor Rick Snyder to modernize outdated converting to a for-profit company. regulations affecting Michigan’s health insurance market- • Language that added another $60 million in place and level the playing field so all health insurance BCBSM contributions to the $1.5 billion proposed companies can compete fairly. by the Governor. This would further enable the This proposal regulated all health insurers under the state’s nonprofit foundation to subsidize Medigap same set of rules, the Michigan Insurance Code, creating plans for seniors after the BCBSM rate freeze a level playing field to increase competition. This reform expires. was to reduce health care costs, improve quality and give • A ban on “most favored nation” clauses in customers more choices while also ensuring that BCBSM contracts between hospitals and health insurers. pays state taxes, from which it is currently exempt. • Language that clarifies BCBSM would make its The Governor’s proposed legislation from 2012 included contributions to the state’s new nonprofit fund as the following provisions: long as the company’s Risk Based Capital is above • BCBSM would pay taxes, estimated to average 375 percent – a level so low the company would $100 million per year over the coming decades. come under financial supervision by the This levels the playing field for BCBSM competitors, Blue Cross and Blue Shield Association. which have long considered the company’s tax • Language requiring subsidies for Medigap exemptions to be a competitive advantage. insurance to be provided to low-income seniors • BCBSM would remain a nonprofit company. As an by the state’s nonprofit fund through 2021. expression of its continuing nonprofit mission, After months and many hours of testimony through the BCBSM would contribute $1.5 billion over the next Senate and House Committees, these bills were ultimately 18 years to a separate and independent nonprofit passed by both chambers and sent to the Governor’s fund to invest in programs to improve public desk for signature. Unfortunately, amendatory language health and protect the vulnerable. additions at the end of the legislative process led to a • BCBSM would provide an estimated $800 million in veto on these bills. However, the Governor in his veto subsidies for its “Medigap” supplemental insurance message urged the legislature to take swift action on this plans for Medicare beneficiaries through July 2016 legislation in the first quarter of 2013 and noted that – freezing rates in those plans at current levels. modernizing BCBSM would be a priority for his administration in 2013. 4 Medical Malpractice Legislation Apparent differences among Republican members of the Senate Insurance Committee had stalled action on a package of bills (SBs 1115 through 1118) designed to help what supporters argued would eliminate a bad medical malpractice environment in Michigan. The bills sought to remove non-economic damages from the equation in medical malpractice awards and would have put doctors under the same “standard of care” umbrella that lawyers currently enjoy. Committee action was anticipated in September; however, strong testimony from the patient and legal community raised a number of questions as to the necessity of certain provision in the package of bills as well as a potential negative effects and recourse for patients. This package of bills did inevitably move in the first week of the lame duck session, with both sides agreeing to come to the table to make some concessions. After action in the House, only two of the four bills in the package were passed and signed into law. Neither of the bills that were signed ultimately ended up being contentious from the physician or legal community. Exchange Legislation Governor Rick Snyder announced on November 16, 2012 that he filed an application with the U.S. Department of Health and Human Services (HHS) for a federal grant to plan and implement a partnership Exchange in Michigan. The States plan had been left open ended as a thought that the Michigan Legislature may take action authorizing a state-based Exchange. However, as that did not occur, at this point the state is moving toward a state partner- ship exchange. Continued work with the legislature is being sought as more details and clarity from the federal government to make a final determination on Michigan’s path forward is forthcoming Any implementation legislation necessary for a state based exchange likely will be sought into the first quarter of 2013, in addition to any appropriated funding that will be necessary to implement the exchange. 5 Insurance Fraud Reform also contained amendatory language. Through testimony In 2012 promising legislation was enacted into law to and continued meetings with House Leadership and prevent insurance fraud in the State of Michigan. PA 39 Committee members, Governmental Affairs, along with of 2012 (Senate Bill 298) prohibits attorneys and business and labor partners, were successful in delaying medical professionals from using individuals as “runners”, any additional movement on this legislation through “cappers”, or “steerers” to help identify people willing to the year. file false insurance claims. As mandates continue to be a cost concern to BCBSM, BCBSM was able to secure amendments to PA 39 of business and labor groups, it will be crucial to continue 2012 (SB 298) to ensure that the legislation was broad a unified effort against mandates into 2013. enough to cover all the entities and compensation Michigan Automated Prescription Service arrangements that file false claims for the purpose of (MAPS) Access committing insurance fraud. Additional legislation was passed in 2012 to help combat Fraud efforts have been a particular concern for BCBSM health care fraud in the State of Michigan. PA 44 of over the years as our Corporate Fraud and Investigation 2012 (House Bill 4369) provides health plans with Department has been nationally recognized for its efforts access to the Michigan Automated Prescription Service to combat this growing issue. We will continue efforts as (MAPS) for the purposes of ensuring patient safety and an enterprise to support and advance legislation, like investigating fraud and abuse. PA 39 of 2012, to help with the costly issue of fraud into Currently, The Bureau of Health Systems, now the the next legislative cycle.

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