Lansing – Michigan’s individual health insurance rates are expected to rise an average of 27.6 percent in 2018, a large hike the state attributes to uncertainty over whether the Trump administration will continue a subsidy to insurers.
The average rate request increase under the Affordable Care Act is far higher than the 16.7 percent hike the state approved for this year. Marketplace insurers received average increases of 6.5 percent increase in 2016 and 8 percent in 2015.
The new rates assume the Trump administration will not continue “cost-sharing reduction” payments to insurers that help subsidize health care for individuals who earn up to 250 percent of the federal poverty level. Under the federal health law passed in 2010, uninsured individuals are required to buy health coverage.
President Donald Trump has indicated he does not support the payments, and the federal government is currently making them on a month-to-month basis, according to the state insurance department.
Proposed rate hikes by insurers would affect nearly 295,000 individuals in Michigan. The increases range from 16.5 percent for Alliance Health and Life Insurance Company plans to 59.4 percent for plans offered by Meridian Health Plan of Michigan, Inc.
The state usually has approved past proposed increases.
The state’s largest insurer, Blue Cross Blue Shield of Michigan, plans to raise rates 31.7 percent for 59,703 individuals. Its health maintenance organization, Blue Care Network of Michigan, which covers more than 116,400 individuals, plans to raise rates 22.6 percent.
Open enrollment for 2018 marketplace plans begins on Nov. 1 and continues through Dec. 15. Many Michigan residents who purchase insurance through the marketplace will qualify for tax credits that could also rise and offset some of the premium increases.
State Insurance Director Patrick McPharlin also required insurers to submit a second set of proposed rates, which propose smaller increases because they assume the federal government continues the cost-reduction payments. But without a guarantee it will happen, the state is expected to approve the higher rates for 2018.
“If we receive a commitment that the CSR (cost-sharing reduction) payments will be made, we are hopeful insurers will be allowed to change to the lower set of rates,” McPharlin said in a statement.
Ten insurers submitted proposals for individual plan rates to the state, including nine that plan to offer policies through the Affordable Care Act’s state marketplace. That’s down from 10 on the marketplace this year and 14 in 2016.
The insurers will offer a combined 115 individual plans through the marketplace and 138 overall. Of those, 93 would have rates hikes exceeding 10 percent.
McPharlin said residents in every county of the state will be able to choose from at least two insurers, while residents in some counties will have eight or nine companies to choose from
“Despite the uncertainty at the federal level, Michigan still has a number of companies participating this year, providing many choices for Michigan consumers,” McPharlin said.
But participation in the individual market is having an impact on earnings.
A review of insurer financial reports released this year by Minneapolis-based health analyst Allan Baumgarten found eight health insurers lost money on Michigan individual health plans in 2016. Blue Cross Blue Shield of Michigan lost $50.1 million, followed by a $39.6 million loss for Priority Health and $12 million in red ink for Alliance Health.
But some companies showed improved financial results for their individual plans in the first half of this year, Baumgarten said.
The pending 2018 rate increases are “predicated on the refusal of the federal government commit to make Cost Sharing Reduction payments to cover subsidies required in the Affordable Care Act,” said Dominick Pallone, executive director of the Michigan Association of Health Plans.
Trump has pushed to overhaul the federal health care law approved under former President Barack Obama, but when a Senate plan failed to pass last month, he suggested Republicans should let “Obamacare implode” as well, “then deal.”
The president has threatened the cost-sharing subsidies, writing on Twitter that “BAILOUTS for insurance companies” will end soon if a new health care bill is not approved.
The Michigan rates could be cut by 10 or more percentage points if Trump and Congress guaranteed the cost-sharing payments, Pallone said. “The lack of strong, continued commitment” to the subsidies “has created uncertainty for consumers and industries across the nation.”
Details of insurers rate change requests are available online. The state insurance department is seeking public comments on the proposed rates through September 15. Comments can be emailed to HealthRateComments@michigan.gov.