Blues offering agents incentive

Blue Cross Blue Shield of Michigan is offering commissions of up to 20 percent to insurance agents who enroll consumers "with no major ongoing health conditions" in a new line of individual insurance plans set to launch March 30.

But agents who sell those policies to "high-risk" consumers -- such as those with a serious illness -- will earn commissions of only 1 to 2 percent, according to a memo from Blue Cross to agents that was obtained Thursday by The Detroit News.

The incentives are part of a new Blue Cross program that ties commissions to the health of new customers and will be launched in tandem with new health plans for the self-insured. The new plans will go into effect April 15.

The aim is to bring in younger and healthier members to balance the costs of covering sicker customers and to compensate insurance agents who sell their policies similar to the way other private insurers do, said Joan Budden, vice president of individual products for Blue Cross.

Budden said Blue Cross is innovating in a market in which it routinely takes on the costliest consumers because they're rejected by other insurers for pre-existing health conditions.

"Without market reform, we're trying to do whatever we can to stay above water," she said, referring to the $133 million in losses incurred by Blue Cross last year on its individual policies.

Rates on the new plans will be higher than for existing individual policies, some by as much as $30 to $40 a month, Budden said. Other changes include plan rates based on family size, rather than a flat-fee, an option Blue Cross hopes will appeal to single-parent households.

The new plans will replace existing options, including Individual Care Blue and Value Blue, which will stop enrolling new customers on March 27. The changes will not affect Blue Cross already enrolled, nor will it change their rates.

Applicants hoping to buy Blue Cross's new individual policies will also for the first time have to answer questions about their health. That information will be used to determine an agent's commission as well as help Blue Cross address medical needs such as chronic-disease management. The risk-level will not affect customer eligibility or rates.

State regulators approved Blue Cross's request to launch the new product line on Feb. 27. Unlike rate hikes for existing customers, state regulators don't require public comment on new products before making a decision.

The public will have the opportunity to weigh in on proposed rate increases for about 400,000 existing customers. Blue Cross is asking for an average rate hike on three types of policies: a 56 percent increase on individual plans; 42 percent on group conversion coverage (which extends benefits from a former employer); and 31 percent for Medigap plans.