The Affordable Care Act has been a boon to Michigan’s health insurance industry, boosting sales of individual policies by nearly 40 percent in the first three months of this year, according to a report released Monday.
Although profits slumped in 2013, the industry is poised for a rebound because it added 88,000 individuals in January, February and March, according to Michigan Health Market Review, an annual report by independent health industry analyst Allan Baumgarten of Minnesota. He credits the high volume of policies sold in the Michigan Health Insurance Marketplace, hosted on the federal website at healthcare.gov.
The surge was experienced by traditional health insurance plans and health maintenance organizations. Blue Care Network was the biggest winner, gaining 58,000 individual members.
Baumgarten’s numbers were provided by insurers and include people enrolled in plans — meaning they paid their initial premiums, according to Baumgarten.
“(The high number of enrollments) suggests that people who didn’t have insurance before have now enrolled in ... insurance companies, and that’s a big net increase,” Baumgarten said. “It means that this is a significant business opportunity for (health insurers).
“There is a previously partly untapped market of individuals who want to be covered, but who had not found affordable coverage in the past.”
The good news came with one exception: Consumers Mutual Insurance of Michigan, the state’s only health insurance cooperative, which formed last year with federal loan assistance. While enrollment surged for most insurers, Consumers picked up just 139 individual members from January through March.
“For benefits starting 2015, they’re going to be dropping their price to try and get a better cut of the market,” Baumgarten said. “It’s a risky thing, especially for a startup.
“It’s going to be a difficult thing to do, especially in a market where there are several players that are well known.”
David Eich, chief marketing and public relations officer for Consumers, said its prices will be lower in 2015. Though it started out only in the individual market, it has expanded to include products for the small group and large group markets.
It also added some “innovative” products that have attracted interest from employers, he added.
“We’re pretty comfortable our prices will be better, but what we don’t know yet is what everybody else’s prices will be,” Eich said. “We think we’re very viable.
“We’re not going to be the top, we know that for sure. But we are going to be competitive. That, coupled with better rates, is going to put us in a very favorable position in ’15 and beyond.”
HMOs that provide coverage for Medicaid patients have experienced declining profits for several years, but could get a boost from Michigan’s Medicaid expansion, Baumgarten added. Profits for Medicaid HMOs fell from $96.4 million in 2010 to $41.2 million by 2013, due to decreased reimbursement by the state.
But Michigan’s reimbursement rates will be higher for consumers covered under expanded Medicaid, called the Healthy Michigan Plan.
Enrollment in expanded Medicaid started April 1 with a first-year goal of enrolling 322,000 residents. Michigan hit that target Thursday after 14 weeks of enrollment.
“It looks like this new group (of Medicaid enrollees) is a significant opportunity for the HMOs,” Baumgarten said.
Eighteen companies — five more than last year — applied with the state Department of Financial and Insurance Services to sell policies during the second Marketplace enrollment period, which starts Nov. 15.
Terry Burke, vice president of individual business with Blue Cross Blue Shield of Michigan, said Michigan has one of the most robust, competitive marketplaces in the nation, and that’s good for consumers.
The Blues offered 18 plans at healthcare.gov during the first open enrollment period, and hopes to increase that to 41 plans Nov. 15. That means more choices for customers.
“(The Affordable Care Act) is going to be a long-term positive in the health insurance industry in general,” Burke said.
“There will be more choice, more products, more price points to choose from.”