After huge spikes, Obamacare rates in Michigan now falling

Jul. 17--Sticker prices for many Affordable Care Act-compliant individual health insurance plans will drop next year, a reversal from the huge price hikes sought in past years by the insurance companies.

Insurers' new proposed rates, which would take effect in 2020 if approved, were announced Wednesday by the Michigan Department of Insurance and Financial Services.

The rates will likely not be affected by any outcome this year in the Texas v. United States case now before the U.S. Court of Appeals for the 5th Circuit. That case could potentially result in the ACA -- still commonly called Obamacare -- being officially declared unconstitutional and therefore null and void.

Legal experts predict that the Texas case would go to the U.S. Supreme Court next year should the appeals court decide to kill the law.

Rates to fall

The Blue Care Network of Michigan, an HMO that insures the most people in Michigan's individual market at about 157,400 people, is seeking to lower its individual plan rates by an average of 1.7% in 2020. And the market's second-most popular insurer, Priority Health, is looking to shave its rates by 0.1%.

Blue Cross Blue Shield of Michigan, the third most popular choice with 50,600 people, wants to drop prices by 7.7%.

Of the two insurance companies that want to raise their individual market rates, Physicians Health Plan and Oscar Insurance, their combined enrollment is only 8,272.

The newly proposed rates show how the market for individual insurance plans under the ACA has significantly stabilized after several years of price spikes.

The average year-over-year increase for Michigan plans was 26.9% in 2017 and 16.7% in 2016. Those increases were because of high utilization of health care by people with those plans, and later, the Trump administration's decision to end a type of subsidy for insurance companies called cost-sharing reduction payments.

Last year, in the wake of earlier price jumps, individual plan rates rose only 1.7% in Michigan.

"We've been pleased to see a slow trend of stabilization in the individual market that's now made it possible for us to offer members lower rates," Terry Burke, vice president of individual business for Blue Cross Blue Shield of Michigan, said in a statement.

5% of the insured

About 5% of Michiganders, or 333,000 people, currently get health insurance through these individual plans, which are sold on the website Healthcare.gov. The lower rates will not directly benefit many of those policyholders because more than 80% of those in Michigan who buy individual plans do not pay full sticker price since they receive the ACA's tax credit subsidies.

Those subsidies grow as the cost of a policyholder's premium increases, which has meant that the federal government foots much of the bill when insurance companies raise premiums.

Health care experts say that the roughly 5% of Michiganders who lack any health insurance are often those who have too much income to qualify for a subsidized individual plan, yet aren't well off enough to comfortably afford the full premium cost.

The poorest individuals in Michigan qualify for Medicaid health insurance.

9 companies offer plans

Even though a handful of insurance companies such as Detroit-based Health Alliance Plan have stopped offering plans through the Healthcare.gov marketplace, there are still nine insurance companies that do. However, many rural Michiganders, including Upper Peninsula residents, will find fewer options to shop on the marketplace.

"The fact that we have nine companies continuing to offer plans shows that Michigan's marketplace is continuing to thrive," Department of Insurance and Financial Services Director Anita Fox said Wednesday. "Some states have as few as one or two options."

There is no longer any penalty under the ACA for not buying health insurance. The tax penalty used to be $695 per adult, or 2.5% of household income, whichever was greater.

The elimination of that individual mandate was part of Republicans' December 2017 federal tax overhaul.

The ACA's open enrollment period will run from Nov. 1 to Dec. 15 for individual market coverage effective Jan. 1.

Michigan's insurance department is accepting comments about the proposed rate changes until July 25 at [email protected].

Insurance companies want the following rate decreases or increases:

-- Blue Care Network, -1.2%

-- Blue Cross Blue Shield, -7.7%

-- McLaren Health Plan, -5.9%

-- Meridian Health Plan, -3.6%

-- Molina Healthcare, -8.8%

-- Oscar Insurance, 8.3% increase

-- Physicians Health Plan, 0.6% increase

-- Priority Health, -0.1%

-- Total Health Care USA, -0.6%

Contact JC Reindl:313-222-6631 or [email protected]. Follow him on Twitter@jcreindl. Read more on business and sign up for our business newsletter.

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