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Most health insurers in Michigan are seeking more rate hikes next year for their individual and small groups plans, and the scheduled end of temporary “Obamacare” subsidies could raise the pain level higher.
State regulators announced Tuesday that insurance companies are seeking an average 5.8% rate increase for their 2023 small group policies — those for organizations with fewer than 51 employees.
For individual policies, such as those sold on the Healthcare.gov website, also known as Obamacare, insurers are seeking an average 6.2% increase.
Those proposed rate hikes are slightly below what insurers were approved for last year for small groups — 7.1% — although higher than the 4.7% increase for individual policies.
Yet for many of those who buy individual policies, the biggest change in 2023 will be the scheduled expiration at the end of this year of more generous premium and deductible subsidies.
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Those tax credit subsidies were part of the American Rescue Plan that President Joe Biden signed in March 2021, and they led to a nationwide surge in Obamacare sign-ups sold on Healthcare.gov.
Congress so far hasn’t acted to extend the subsidies, and it is unclear whether lawmakers will.
“It still is very much up in the air about what’s going to happen,” said Cynthia Cox, a vice president at the Kaiser Family Foundation, a heath care-focused nonprofit.
The projected annual cost to the government of the extra subsidies is about $22 billion, Cox said.
The subsidies have made a significant difference in the premiums and out-of-pocket costs for individual policies.
The American Rescue Plan made the subsidies available for higher-income people who previously didn’t qualify, and lowered premiums and deductibles for many individuals who were previously eligible for some subsidy.
In the 33 states including Michigan that use Healthcare.gov, premium payments in 2022 would have been on average 53% higher without the temporary subsidies, according to the Centers for Medicare & Medicaid Services.
An estimated 260,000 Michiganders are receiving the extra subsidies, saving an average of nearly $400 per month, according to the Department of Insurance and Financial Services.
A total 359,777 Michiganders are enrolled in an individual health insurance policy, according to the department. There are 446,389 Michiganders enrolled in a small group policy.
The state’s largest health insurance company, Blue Cross Blue Shield of Michigan, anticipates lower enrollment in its individual plans for 2023 if the Obamacare subsidies expire as scheduled at year’s end, said Rick Notter, The Blues’ vice president of individual business.
The Blues also anticipates a larger share of its individual market enrollees picking “Bronze” plans for 2023 rather than “Silver” because the subsidies made Silver plans, which offer more benefits than Bronze plans, more affordable.
Blue Cross is seeking an 8.6% rate increase for its individual market Blue Care Network HMO, which enrolls 117,869 people.
The insurance giant’s PPO plan, which is the only PPO plan in Michigan available on Healthcare.gov and enrolls 52,636, is looking to decrease rates by 2.8%.
Notter said Blue Cross has seen higher utilization and medical losses for its HMO plan than PPO. A new federal actuarial rule also is affecting HMOs more than PPOs, he said, leading to bigger HMO rate increases.
Following a surge in demand for medical services last year, utilization of services by those enrolled in individual health plans is now normalizing, Notter said.
The pent-up demand had been a result of people putting off medical procedures and services during the early months of COVID-19 starting in March 2020.
The Department of Insurance and Financial Services is accepting public comments on the proposed rate changes until July 18 at DIFS-healthratecomments@michigan.gov.
ContactJC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
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