Individual health plan costs on rise
Seventeen of 21 Michigan health insurers selling coverage at HealthCare.gov. are requesting rate hikes, apparently in anticipation of a U.S. Supreme Court decision that could cut federal subsidies for those policies.
Blue Cross Blue Shield of Michigan, which writes about 70 percent of the policies, is seeking an 11.3 percent increase.
More than half of the insurers are seeking premium increases of 5 percent or more beginning in January under the Affordable Care Act, the Michigan Department of Insurance and Financial Services said Monday. More than 340,000 Michiganians purchased insurance on the health exchange last year and could be affected by the requests.
Five insurers, including Blue Cross, requested double-digit increases. The largest, 37 percent, is sought by Time Insurance Co., which is creating all new plans for next year.
The requests, which require approval of the state insurance agency, come as the nation's highest court is expected to rule this month on the King v. Burwell case concerning the legality of federal subsidies paid to consumers in states such as Michigan that don't run their own health insurance exchanges. Michigan is among 36 states that use the federal Health Insurance Marketplace at HealthCare.gov; 14 states have their own marketplaces.
"Folks don't know how King v. Burwell will end up," said Rick Murdock, executive director of the Michigan Association of Health Plans, which represents most insurers in the state except Blue Cross. "It's a big deal for a place like Michigan where (more than) 80 percent of folks served on the exchange have some kind of subsidy."
Insurers are worried that consumers may abandon their policies if federal subsidies are eliminated, Murdock said. Some insurers might be building a cushion into their rates to adjust for a potential loss of business, he said.
An increase in prescription costs is behind the Blue's proposed rate hike, said Rick Notter, the insurer's director of individual insurance. Blue Cross had 138,169 people sign up for individual plans in 2015, while another 171,831 people with individual Blue Care Network policies will see average increases of 9.7 percent.
"The primary driver behind that were the increases in medical costs, especially the prescription drugs and specialty drugs," Notter said. "Specialty drugs in general have a very high price tag, about 7 percent (higher year-to-year)."
Requests for premium hikes of 10 percent or more must be approved by the Department of Insurance and Financial Services as well as the federal Centers for Medicare and Medicaid Services. Rates frequently are adjusted during the review process, according to state and federal officials, and won't be known until the day the exchanges open for 2016.
In Michigan, 88 percent of federal marketplace consumers received a premium tax credit in 2015. The average premium paid by consumers was $130, with a savings of $236 because of the premium tax credit, according to Centers for Medicare and Medicaid. More than 341,000 Michiganians purchased insurance on the health exchange.
At least three health insurance companies — Humana Medical Plan, Meridian Health Plan and Molina Healthcare — want to decrease their rates from 4.9 percent to 12.6 percent. Harbor Health Plan is creating all-new 2016 health plans that would reduce rates an estimated 24 percent, according to the state.
Rates for small-group policies purchased by employers appear to be less volatile. Among 17 insurers selling plans through the federal exchange, eight requested increases ranging from 0.8 percent to 8.7 percent. Six, including the Blues' health maintenance organization called Blue Care Network, plan to decrease their rates.
The U.S. Department of Health and Human Services on Monday posted requested rate increases from insurers on the federal exchange asking for hikes of 10 percent or higher in 2016. The rates must be finalized by October. The rate increases posted are for the cost of premiums before tax credits.
According to the CMS, more than 8 in 10 individuals who selected a 2015 plan through HealthCare.gov qualified for an average advanced premium tax credit of $263 per person per month.
"The rate review process kicks off an important set of steps designed to provide consumers and others the opportunity to weigh in on proposed rate increases of 10 percent or more," said Andy Slavitt, CMS' acting administrator. "These specific rates will be subject to vigorous rate review and revision and the final rates consumers will see this fall will reflect the breadth of choice and competition in the Marketplace."
Asked if the requested rate increases in the individual health plans are a harbinger of higher rates to come for large market plans sold to big employers, Murdock said they are not. The dynamics are different because large employers don't purchase insurance on the federal exchange.
Depending on how the U.S. Supreme Court rules on federal health subsidies, insurance companies that offer required plans to individuals and certain small businesses would welcome an opportunity to make mid-year rate adjustments, which they currently aren't allowed, Murdock said.
"We still don't have any certainty of the potential for an adjustment after the Supreme Court opinion," he said, "assuming a negative position (against subsidies)."
Congressional Republicans — including U.S. Rep. Fred Upton, the St. Joseph Republican who chairs the House Energy and Commerce Committee that oversees many health issues — say they would offer alternative legislation to ensure people get insurance. But they haven't agreed on a common plan.
Michigan's top health plan rate requests for January 2016:
Blue Cross BSM…11.3
Source: Michigan Department of Insurance and Financial Services