Michigan Health Insurers Seeking Bigger Rate Hikes

Michigan health insurers are seeking bigger rate increases next year from some employers and individuals as health care spending returns to "normal" after the worst of the COVID-19 pandemic.

State regulators announced this week that small group policies — those for organizations with fewer than 51 employees — want an average 7.1% rate increase for 2022 and individual policies want an average 4.5% increase.

The proposals, still subject to approval, are significantly higher than last year's average 1.4% rate increase for small groups and 1.1% increase for individual policies. Those increases were unusually low because health insurance companies saw fewer claims during the pandemic as people put off elective procedures and made fewer visits to the doctor.

Now that the pandemic has eased, Michigan health insurers are seeing patients return to clinics and hospitals.

"As this year's progressed, it appears (utilization) is getting back closer to pre-COVID levels, if not in some months actually exceeding that," said Rick Notter, vice president of individual business for Blue Cross Blue Shield of Michigan.

Notter said rising prescription drugs costs were a major reason for insurance premium increases before the pandemic, and will be so as well for next year.

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Blue Cross is the biggest player in Michigan's employer-sponsored insurance market and is seeking an average 7.9% rate increase for its small group plans and a 6.9% increase for its Blue Care Network small group plans.

A Blue Cross representative said those increases are because of higher medical and pharmacy claims, and that its small group rates saw a modest 1.2% average yearly increase between 2015 and 2021.

Priority Health is seeking 5% average increases for its small groups.

"Rate increases are always set with the prospect of the future in mind," Diane Wolfenden, Priority's vice president for its east region. "There's some pent-up demand, and things are expected to return to more of a normal state next year."

She added that while a 5% increase "might sound like a lot, in the world of health care, it's actually pretty good."

The rate increases, if approved, wouldn't directly impact everyone who buys an individual policy on the Healthcare.gov website. That is because the government's Affordable Care Act subsidies to income-eligible individuals also increase as policies' sticker prices increase.

President Joe Biden's American Rescue Plan, signed into law in March, expanded the subsidies for Healthcare.gov insurance plans while extending the special enrollment period for those plans through Aug. 15.

Many took advantage of the special enrollment, as nearly 29,000 Michiganders signed up for coverage between the Feb. 15 start of the enrollment period and the end of June.

Individuals who signed up earlier for a Healthcare.gov plan but didn't take advantage of the expanded subsidies can still get those extra tax credits next year when they file their annual taxes.

For the 2022 open enrollment period that begins Nov. 1, Michiganders can chose individual plans from nine different insurance companies. That is one less company than last year, as Total Health Care USA is dropping out. A Total Health Care representative didn't return a message Tuesday seeking comment.

The Michigan Department of Insurance and Financial Services is accepting public comments about the proposed health insurance rate increases until July 31 at the email address [email protected].

Total current enrollment in Michigan is 423,177 for small group plans and 318,913 for individual plans.

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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