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Affordable Care Act rates rise nearly 17% in Mich.

Karen Bouffard
The Detroit News

Michigan consumers will pay an average of 16.7 percent more for individual insurance plans starting in January, according to new premium rates announced this week by the Michigan Department of Financial and Insurance Services.

By contrast, small group plans will increase by an average of 2.5 percent.

Residents purchasing plans at HealthCare.Gov will have fewer options since four carriers withdrew plans that were available last year. All lower Michigan counties will have at least three companies from which to choose. Upper Peninsula counties have at least two, with the exception of Schoolcraft County where one company will offer coverage.

HealthCare.gov launched in 2013 as a key part of the federal Affordable Care Act. Michigan’s insurance rates increased by an average of 6.5 percent the following year and by 8 percent in 2015. The 2017 open enrollment period starts on Nov. 1.

Larger increases were expected this year, partly because a transitional reinsurance program included in the federal health law to stabilize rates ends in 2017, said Cynthia Cox, associate director of health reform and private insurance for Kaiser Family Foundation. She said insurance carriers also underestimated the cost of health care for people who signed up for earlier marketplace plans.

“Insurers didn’t have much information to work with when they set their premiums to begin with,” Cox said Tuesday. “That’s why we’re seeing a sort of market correction this year.

“The premiums had to go up so that plans would be able to cover their costs, and rather than increasing premiums some insurers decided to leave the market.”

Priority Health Insurance and Alliance Health and Life Insurance both dropped their preferred provider organization plans, but still offer coverage through their health maintenance organizations, Priority Health and Health Alliance Plan. Harbor Health Plan and UnitedHealthcare Community Plan both dropped their HMOs from the individual marketplace. About 10,000 consumers are affected.

“Michigan is fortunate in that we continue to have a stable and competitive health insurance market with a range of options and premiums for consumers and businesses throughout the state,” Director Patrick McPharlin of the state Department of Financial and Insurance Services said in a press release.

People whose plans were dropped will automatically be re-enrolled with a different carrier if they don’t select a new plan by Dec. 15.

The rate changes affect about 750,000 Michigan residents who enrolled in individual or family policies or through their small group employer, according to DIFS. State insurance officials recommend consumers shop around for coverage because people who switch plans save an average of $42 per month, or $500 annually.

According to a recent U.S. Department of Health and Human Services report, more than 40 percent of returning HealthCare.gov consumers switched plans saving an average of $42 per month, or about $500 annually. It is also important for consumers to be aware that Open Enrollment starts Nov. 1.

Priority Health offers the most plans in Michigan’s Marketplace, with 41 policies to choose from. It discontinued its PPO because too few people enrolled last year, said Marti Lolli, Priority’s senior vice president for commercial markets.

“We discontinued the products that people weren’t purchasing enough.” Lolli said Tuesday. “In this market people are really willing to trade off broad network access in order to have a lower cost in their premiums.”

Priority’s rates increased by an average of 13.9 percent, less than the state average, she noted. In addition to high health care costs and the loss of federal reinsurance, Lolli blamed skyrocketing prescription costs for the increase.

“We try really hard to keep premiums affordable,” she said. “ Even when you’re talking 8 percent, it’s hard to afford an increase.”

KBouffard@detroitnews.com