Blue Cross Blue Shield of Michigan plans to raise rates for health insurance purchased at HealthCare.gov by an average 26.9 percent for individuals and 13.8 percent for Blue Care Network plans.
But the increases will be higher if Congress eliminates cost-sharing funds currently paid to insurance carriers, the company announced Wednesday.
Insurers had until noon Wednesday to submit their proposed plans if they intended to sell policies next year through HealthCare.gov, the health insurance marketplace established by President Barack Obama’s health reform law, also known as Obamacare.
The rates must be approved by the Michigan Department of Insurance and Financial Services (DIFS). The department will publish carriers’ proposed rates on Aug. 1, spokeswoman Andrea Miller said.
Amid uncertainty in Washington, D.C., state regulators asked insurance carriers to submit two sets of proposed rates by the filing deadline to reflect how their rates would change with or without the $166 million in cost-share reduction (CSR) funds Michigan companies received in 2016.
If the CSR payments are eliminated, Blues members would pay an average 31.7 percent more for individual plans and 22.6 percent more for Blue Care Network plans if the proposal is approved.
Another insurer, Priority Health, which will offer plans throughout Michigan’s Lower Peninsula in 2018, proposed a 17.7 percent rate hike if CSR funding continues, and 19 percent if the payments are slashed, spokeswoman Amy Larson Miller said Wednesday.
Dominic Pallone, executive director of the Michigan Association of Health Plans, said the group is “very concerned about the uncertainty of federal reform and the impact that uncertainty has on Michigan’s individual market.”
“Without a clear resolution on the future of the Cost Sharing Reduction Subsidies,” Pallone said. “Plans will be filing dual rates — one priced as if the CSRs continue, and one priced without the CSRs.
“National estimates assume that the price differential will be more than 20 percent just based on the availability of the CSRs. I don’t have any data for Michigan yet, but it’s safe to say I expect the national estimate to hold true here.”
The cost-sharing reduction funds go to insurance companies to reduce the amount Americans with incomes up to 250 percent of the federal poverty line pay for their share of medical bills, and are in addition to the advanced premium tax credits — or subsidies — that lower premiums for consumers.
The cost-share is paid only for silver plans purchased on the exchange.
“There has been a discussion in Washington about whether to continue (cost-share reduction funding) or not,” Andy Hetzel, vice president of corporate communications with Blue Cross Blue Shield of Michigan, said in a media call Tuesday. “If that funding disappears, the rates change and the increases are higher.”
Blue Cross Blue Shield is Michigan’s largest health insurer, with 215,000 members enrolled in individual plans. Statewide, 321,451 residents are enrolled in Marketplace plans. About 81 percent receive federal subsidies that reduce the cost of their premiums by an average $264 per month.
The Blues will continue to offer plans in each of Michigan’s 83 counties in 2018, but will reduce the number of plans available from 38 to 34, Hetzel said.
“We understand that premium increases like those we’re putting forward may impact family budgets significantly,” Hetzel said. “But our members also see health insurance as critical to their security... and that’s why we strongly support the continuation of the cost-share reduction program.”
Hetzel described the health insurance marketplace as “volatile” in Michigan and across the country, causing some carriers to drop out of the market. Several factors, including skyrocketing prescription drug costs, have made it hard for insurance companies to keep prices affordable. For Blue Cross Blue Shield of Michigan, prescription drug costs have increased by 73 percent in the past seven years, Hetzel said.
About 20 percent of the Blues’ individual enrollees drop coverage after receiving health services, driving up costs for people who stay insured. And the industry as a whole has struggled to attract younger and healthier people, weighing down the insurance pool with sicker people who have higher health care costs.
Daniel J. Loepp, president and CEO of Blue Cross Blue Shield of Michigan, said the cost-sharing reduction helps insurers keep premiums affordable for consumers.
“Since the ACA became law, Blue Cross has offered statewide access and multiple plan options to Michiganders who need to buy coverage on their own,” Loepp said in a press release. “As political and economic forces continue to affect a volatile individual market, Blue Cross’ focus is providing the access and choice Michigan’s people depend upon.
“Affordability is also critical, and CSR funding is vital to help us keep costs within reach for lower-income people. We encourage policymakers in Washington to support it.”