Michigan Developments
Eric Rule,
Director of Governmental Affairs

Small-market health insurance reform passes
After fierce debate and arm-twisting, legislation to implement rating reform for Michigan’s small-business health insurance market passed the Michigan Legislature by comfortable margins. The governor signed the bills July 23.

MRA supports the legislation, as it seeks to correct a serious defect in the small-group market that has been driving up insurance premiums for businesses. The new rules institute “rate bands” which establish a relationship between the lowest and highest rates any insurer can charge its customers.

The legislation just passed will allow Blue Cross Blue Shield of Michigan and the state’s health maintenance organizations to set premiums that vary no more than plus or minus 35 percent from a midpoint index rate. Commercial insurance companies’ rates could vary no more than 45 percent from the midpoint. Each company chooses its own midpoint, therefore setting its own rate band as well as the prices it will charge within the rate band.

This practice, developed by the National Association of Insurance Commissioners, is used in 37 other states, including Indiana and Ohio.

The rate bands will phase in over the next three years. Once they are fully in place, future increases are limited to 15 percent plus “trend,”—the changes in rates that come as a result of changes in a group’s characteristics, such as age or industry.

These changes are expected to help stop the abuse of Michigan’s insurance market known as “adverse selection,” in which some carriers deeply discounted rates for younger, healthier groups and priced coverage prohibitively high for older, less healthy groups. By tying the bottom rate to the top rate, this legislation should end the practice of “cherry picking” healthy risk and “dumping” groups with older, less healthy people back into the community pool.

It is important to note what this legislation does not do. It is not expected to mean lower insurance rates for small business. But it does mean that the double-digit increases most businesses have felt over the past several years should stabilize, and future increases should be much more reasonable, owing to the 15 percent plus “trend” cap on annual increases.

Governor signs anti-spam legislation
The House version of legislation attempting to restrict the sending of unsolicited commercial e-mail (spam) was signed into law by Gov. Granholm in mid-July, after receiving unanimous approval by the Senate. HB 4159 was sponsored by Rep. Bill Huizenga (R-Zeeland).

The new law requires, among other things, that senders of commercial e-mail provide a way for recipients to opt out of receiving additional unsolicited emails.

Maximum penalties for violators are one year in prison and/or a $10,000 fine for each e-mail sent; penalties are higher if the violation occurs in the furtherance of another crime.

The Senate bill, which goes a step further by creating a statewide "do not e-mail" registry, similar to the "do not call" registry, may still be reviewed later this fall.

Workers’ Comp Appellate Commission cut
The Workers’ Compensation Appellate Commission, a body that reviews workers’ compensation appeals, will be reduced by three members to a four-member body, as a result of a conference report signed as part of the Consumer and Industry Services (CIS) budget.

The decision, while not favorable to the business community, may have been better than other possible scenarios. Governor Granholm originally viewed the commission as an unnecessary layer of bureaucracy and recommended eliminating it altogether. Republicans argued that the commission is important in worker-dispute resolutions. They were able to craft a compromise in which more than half of the body remains funded.

House committee considers gas-pricing bill
A bill seeking to implement a mandatory minimum markup on the sale of gasoline was taken up in the House Transportation Committee. HB 4757 was sponsored by Rep. Charlie LaSata (R-St. Joseph).

MRA opposes the bill because of its anti-free-market approach to retail through price setting. The bills would hurt consumers by guaranteeing higher prices at the pump. This could severely reduce vacation travel, which would hurt the tourist economy and retailers, especially during the summer.

Update from Washington
James Goldberg,
MRA Washington Counsel

Millions don’t want to be called
The Federal Trade Commission began accepting requests to be listed on its national “do not call” registry just before the July 4 holiday, and more than 17 million telephone numbers were registered in the first two weeks.

As of October 1, interstate telemarketers will be prohibited from calling any telephone number on the list. Telemarketers who call these numbers could face fines up to $11,000 per call. State law, not federal, covers intrastate telemarketers, but the federal list is also Michigan’s list.

Political organizations, charities, telephone surveyors and tax-exempt nonprofit organizations are free to continue calling. Companies that have done business with an individual may continue calling for 18 months after the last purchase or transaction with the firm.

More information is available at www.donotcall.gov/faq.

‘White collar’ overtime proposal under fire
The Labor Department received more than 100,000 comments on its proposed overhaul of the overtime pay rules covering so-called “white collar” employees (executive, professional and administrative workers), most of which were generated by labor union members opposing the proposed changes.

MRA, along with other retail industry and business organizations, strongly supports the white collar changes that will bring needed clarity and simplicity to the outdated overtime pay rules. The white collar overtime rules have not been changed in more than 25 years.

In their comments objecting to the proposed changes, organized labor said the changes would remove thousands of workers from overtime protection.

MRA’s Washington office successfully urged House members to reject a rider to the Labor Department’s appropriations bill that would prohibit the agency from continuing with the rule-making project. At press time, the office is contacting members of the Senate to urge the same thing.

If the effort to block the rules fails, the Labor Department is expected to issue its final version of the rules in early 2004.

Supreme Court punts on Nike case
The U.S. Supreme Court, in an unusual move, said it made a mistake earlier in the year when it agreed to decide whether Nike, Inc. can be sued for allegedly inaccurate statements it made to counter charges that its shoes are made by mistreated, underpaid workers overseas.

At issue was whether Nike’s statements were political or social comment entitled to protection under the First Amendment, or whether they were “commercial speech” accorded less protection. In refusing to decide the case, six members of the Court wrote that a trial in the case might generate the kind of information they need to make a determination in this matter.

The origins of the case lie in the mid-1990s. In response to accusations by anti-globalization activists, Nike made public assurances that its products were made under humane conditions. A San Francisco activist considered the company’s replies to be part of a campaign of corporate deceit and brought a lawsuit against the firm, citing a California law that gives each state resident the right to sue a company for false advertising or other consumer fraud, regardless of whether the resident was personally damaged. The case now returns to California for trial.

Anti-spam legislation gains momentum
Corporate support for legislation to curtail unsolicited e-mail (or “spam”) may increase over the next few months as a result of a recent California Supreme Court decision. That decision rejected a claim by Intel corporation that unwanted e-mails to its employees represented an illegal trespass to its computer system.

The 4–3 decision upheld the right of a disgruntled former Intel employee to send e-mails to current employees because the e-mails did not damage Intel’s computers or impose a significant cost on the company.

Legislation to regulate spam is now proceeding through Congress. MRA’s Washington Office is working with a National Retail Federation task force in an effort to assure that any federal legislation does not unduly restrict the ability of retailers to communicate with their customers.