Health insurance costs will be down slightly in Metro Detroit during 2016, despite price hikes in much of the country, according to federal data.
Experts said prices are holding steady in the state because of robust competition between 14 insurers offering plans at healthcare.gov.
“A big driver (of lower rates) is competition amongst insurance companies,” said Michael Mahoney, senior vice president of consumer marketing for GoHealth, a Chicago-based company that powers a private health insurance exchange and an approved health insurance enrollment partner with the federal government.
“Michigan has 14 insurers; 12 of those are in Detroit. That’s a lot. Oklahoma, for example, only has two insurers, and rates there went up 37.5 percent.”
The price of benchmark plans sold in the federal marketplace increased an average of 7.5 percent in 2016, according to the federal Centers for Medicare and Medicaid Services. The federal government uses the second-lowest-cost silver plan to compare costs.
Michigan and Florida had the smallest increases in the country, with prices rising 1.2 percent on average. Prices decreased in four states, including Indiana (12.6 percent), Mississippi (8.2 percent), Maine (1.2 percent) and Ohio (0.7 percent.)
Costs dropped 1 percent in Detroit, the fourth biggest decrease among large American cities. The largest declines were in Indianapolis (11.8 percent), the Cleveland area (6.3 percent) and the Tampa, Florida-area (2.4 percent).
Jerome Konal, a principal and employee health and benefits business leader with the global consulting firm Mercer in Detroit, agreed that competition is working to keep rates lower in Michigan. But it’s also likely that insurers have concluded it’s less expensive to insure Detroiters than they initially thought, he said.
Insurers adjusted their 2016 rates based on claims data, Konal noted. The huge range of rate changes from state to state — from a 37.5 percent increase in Oklahoma to the 12.6 percent decrease in Indiana — indicates that insurers are still adapting to the federally created health care marketplace, he added.
“The carriers have had additional time now, additional experience with which to further develop their rates,” Konal said. “I believe this recalibration is the result of additional claims data, which allows them to more accurately price the plans.
“It has to be more favorable than what the original underwriting had called for, (and) that’s a good thing.”