DETROIT (AP) — Blue Cross Blue Shield of Michigan said Thursday it could pay roughly $4 million annually in local property taxes with most going to the cash-strapped city of Detroit if the Legislature and Gov. Rick Snyder approve a proposed overhaul.
Michigan's largest insurer estimates it would pay more than $2.6 million on four properties it owns in Detroit based on 2011 tax rates. The remainder would go to Lansing, Southfield, Grand Rapids Township, New Hudson, Marquette and Utica for properties there. The tax estimates are based on 2012 Blue Cross' assets and do not include a property sold last fall in Traverse City.
The proposal passed last week by the Senate would end Blue Cross' tax-exempt status, ease regulations and move from a charitable trust to a customer-owned nonprofit. Blue Cross has estimated its state and local taxes it pays will average $100 million annually during the coming decades. Angela Minicuci, spokeswoman for the state's Department of Community Health, said state officials have reviewed and approved the tax information provided by Blue Cross.
"Obviously paying taxes is an expense for our business that wasn't there before. But it is an opportunity for local governments as well as the state to generate new revenues that have not existed during a time of tight budgets when essential services are in jeopardy," Blue Cross spokesman Andy Hetzel said. "For these communities where we have facilities, this legislation represents ... an economic development opportunity to generate additional tax revenue without asking taxpayers for it."
Detroit in particular is trying to find as many savings as possible while dealing with a budget deficit of more than $300 million. A review team is soon expected to report the city's fiscal condition to Snyder, who could appoint an emergency manager if a financial emergency is found.
Snyder vetoed overhaul legislation in December at the end of the last legislative session because of last-minute abortion provisions added to gain majority Republicans' support. The reintroduced plan without the abortion language moved quickly through the Senate last month and onto the House, where its future is murkier because a new crop of lawmakers took office weeks after the Republican governor's veto.
Another key element is what supporters call regulatory reform and critics call deregulation. Rate change requests would be reviewed by the state insurance commissioner, as other insurers currently are, and no longer be subject to an extra layer of scrutiny by the state attorney general.
The proposed overhaul seeks to modernize but not sell Blue Cross, which is governed by a separate state law from other insurers and typically waits much longer for its rate changes to be reviewed. Streamlining regulations, supporters say, is particularly important as health insurers gear up for the federal Affordable Care Act to take full effect and get products and rates ready for an online health exchange where people can compare and buy their own insurance plans.
By transforming, Blue Cross also would shed its charitable "social mission" and contribute up to $1.5 billion to a nonprofit foundation carrying on that work. The foundation would work to improve public health and health care access, particularly for children and the elderly. About 60 percent of the money is earmarked in the first few years to subsidize Medigap, which fills the gap in Medicare coverage for seniors, to prevent rates from significantly rising.