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BY PATRICIA ANSTETT
FREE PRESS MEDICAL WRITER

Ken Ross has been hearing a lot lately from senior citizens upset over increases in their Medicare premiums.

As commissioner of Michigan's Office of Financial and Insurance Regulation, Ross will make the final decision by Dec. 4 on whether to grant Blue Cross Blue Shield of Michigan a 31.2% rate increase that affects 210,000 seniors with supplemental Medicare policies through the Blues.

A Lansing administrative law judge is hearing the case first.

Ross and his agency also are likely to play a significant role creating and regulating the health insurance exchanges through which people would purchase coverage, some with federal subsidies, under several bills pending before Congress.

"There's a real opportunity to get some good stuff done," said Ross, who sees in federal health care reform a "once in a lifetime opportunity" to craft a "comprehensive solution to some of the problems that have really dogged American families for generations now."

In an interview Monday, Ross, 42, an attorney, talked about his views on federal and state health insurance proposals, as well as what he has done to hold down health insurance costs at Blue Cross, the state's largest insurer. Ross' agency is required by state law to monitor the insurer's financial health and the affordability of its products.

Hundreds of people have called his office, mostly to complain, since Ross approved interim rate hikes in August of 4.7% for Blue Cross Medigap policies -- those without drug coverage that help pay for doctor and hospital charges not covered by the basic Medicare program.

The interim rate hike increased Medigap premiums to $112.12 a month, up from $107.09. Still pending is a Blue Cross request to raise Medigap rates another 31.2%.

Ross also approved rate hikes averaging 22% for some 200,000 people who buy their own Blue Cross insurance outside of a workplace.

But the increases he approved were significantly less than those sought by the Blues. The insurer had requested a 56% increase in individual or non-group plans, and a 41% jump for group conversion plans for people losing workplace coverage. For a single person, premiums rose Oct. 1 by $47 a month for non-group plans, and $53 more a month for those with group conversion policies.

"While not perfect outcomes ... there's clearly a big reduction between what was granted and what was asked for," Ross said. He expects federal or state reforms will help create more affordable insurance products, including policies that could be purchased through state or regional insurance exchanges. The exchanges also would offer subsidies to low-income people to help them buy insurance.

"I think the system we have for those who have insurance, it's a good system," Ross said. "But it's an expensive system. It could be much more efficient."

In the interim, Ross faces critical issues, balancing requests by hundreds of people who have called and e-mailed his office asking him to deny Blue Cross rate hikes, with the company's claim it will lose more than $1 billion on its individual insurance business, including Medigap policies, through 2011.

Attorney General Mike Cox and others want Blue Cross to hold down Medigap rates by collecting a 1% subsidy allowed by state law to hold down the cost of monthly premiums, as well as possibly use some of its $2.4-billion surplus to offset rate hikes.

Blue Cross has said the reserves are needed for emergencies and are below maximum levels allowed. And they say many companies don't want to pay the subsidy, given higher costs they face for health insurance for their own employees.

Ross estimated that the Blues' failure to collect the subsidy from all of its group customers, including ones with self-funded plans, results in "tens of millions of dollars" that it must make up elsewhere, from other customers or from company revenues.

Failure to collect the money "has been the major bone of contention historically between the Blues and the agency for the better part of almost 20 years now," Ross said. He expects the subsidy and reserve issues will be addressed in the ongoing Medigap hearing.

Contact PATRICIA ANSTETT: 313-222-5021 or panstett@freepress.com