Highlights and updates
- Open enrollment for 2021 health plans is November 1 – December 15, 2020. Residents with qualifying events can enroll or make changes to their coverage outside that window.
- For 2021, Michigan’s individual market premiums are increasing by about 1%, but average benchmark premiums are decreasing by 4%
- Michigan insurers decreased premiums by about 2.5% for 2020, after a very modest (less than 2%) rate hike in 2019.
- Nearly 263,000 enrolled in 2020 plans during open enrollment, down nearly 24% since 2016.
- Michigan continues to have a robust exchange, and although there are fewer insurers than there were in the first few years, Oscar joined the exchange in 2019.
- Short-term health plans can be sold in Michigan with initial plan terms up to 185 days.
Michigan exchange overview
Michigan has a state-federal partnership exchange; the state oversees plan management, but HealthCare.gov is used for enrollment.
Michigan expanded Medicaid eligibility under the ACA, and the exchange can enroll people in Medicaid or qualified health plans (QHPs), depending on their income. A new Medicaid work requirement took effect in January 2020, but it was overturned by a judge in March 2020 and is not currently in effect.
Michigan has a robust exchange with nine insurers offering coverage for 2021. The state’s insurers are implementing an overall average rate increase of about 1.1 percent for 2021, on the heels of an average rate decrease of about 2.5 percent for 2020.
It’s noteworthy that if the individual mandate penalty hadn’t been eliminated, and if the Trump administration hadn’t expanded access to short-term plans and association health plans, averages rates would likely have decreased in Michigan in 2019 as well, as opposed to the roughly 2 percent average rate increase that was implemented that year (note that Michigan has its own limits for short-term plans that are more restrictive than the Trump administration’s rules, but more lenient than the rules the Obama administration had enacted).
2021 rates and plans: Average rate changes for on-exchange plans vary from a 6% decrease to a 6% increase
Open enrollment for 2021 health plans began November 1, 2020 and continues through December 15, 2020. Outside of open enrollment, Michigan residents with qualifying events can sign up for coverage or make changes to their existing coverage.
In most of Michigan, at least four insurers are offering plans for 2021, although there are just two participating insurers in upper Michigan.
Michigan’s nine exchange insurers are all continuing to offer plans for 2021, with mostly modest average premium changes. The approved rate changes were posted by the Michigan Department of Financial Services in October 2020. In most cases, the initial filings that the insurers proposed were approved, although Meridian had initially proposed a 2.7 percent average rate increase, and ended up with an approved rate decrease of 5.6 percent. The following average rate changes are being implemented for 2021:
- Blue Care Network (the HMO subsidiary of Blue Cross Blue Shield of Michigan): (120,779 members); 2.5 percent increase (SERFF filing number BCNT-132411437)
- Blue Cross Blue Shield of Michigan: (34,306 members) 1.7 percent increase (SERFF Filing number BBMI-132411420)
- McLaren Health Plan: (2,905 members); 2 percent decrease (SERFF filing number MCLH-132354825)
- Meridian (Ambetter as of 2021): (11,240 members); 5.6 percent decrease(SERFF filing number HPMI-132396187)
- Molina: (10,373 members); 0.4 percent increase (SERFF filing number MHCM-132396388)
- Oscar Health: (1,340 members) 6 percent increase (SERFF filing number OHIN-132398401)
- Physicians Health Plan: (6,846 members); 3.1 percent increase (SERFF filing number PHPM-132394063)
- Priority Health (HMO and POS): (90,287 members) 0.12 percent decrease (SERFF filing number PRHL-132382678)
- Total Health Care USA: (11,872 members) 0.39 percent decrease (SERFF filing number THCI-132410124)
Alliance Health & Life, and Health Alliance Plan, both of which only offer coverage outside the exchange in Michigan, are each implementing average rate decreases for 2021. Across the full individual market, this amounts to an overall average rate increase of 1.1 percent for 2021 (slightly less than the average increase of 1.3 percent that the insurers had proposed).
But although overall average premiums are increasing slightly in Michigan for 2021, the average benchmark premium is decreasing by 4 percent. Premium subsidy amounts are based on the cost of the benchmark plan, so this means that average subsidies will be a little smaller in 2021, assuming all other factors (applicants’ income, location, and age) remain the same. This makes it particularly important for people to actively comparison shop for their coverage during open enrollment, as they may need to switch to a different plan in order to get the best value (or they may decide that it’s worth more to keep a certain provider network or drug formulary, but this is still a decision that needs to be actively made, as opposed to relying on auto-renewal).
Michigan’s Department of Insurance and Financial Services published a bulletin in May clarifying that insurers would have to thoroughly document and justify any COVID-19 rating factors that they incorporate into proposed 2021 rates. Ultimately, most of Michigan’s insurers did not incorporate COVID-19 factors into their 2021 rates.
Michigan insurers decreased average premiums by 2.5% for 2020, but average benchmark premiums decreased by 6% (so average subsidies decreased more than average premiums)
Michigan has 11 insurers in the individual market, nine of which offer plans in the exchange (coverage areas are localized, so different insurers offer coverage in each area). Across the 11 insurers, there was an overall average premium decrease of 2.5 percent for 2020 (note that Charles Gaba at ACA Signups calculated the average rate decrease to be 2.1 percent). That came on the heels of an average rate increase of just 1.7 percent in 2019 in Michigan’s individual market, so the rate changes for 2020 brought pre-subsidy premiums down below the level they were at in 2018.
But average benchmark premiums in Michigan dropped by 6 percent for 2020, and premium subsidies are based on benchmark premiums; when benchmark rates decrease, so do subsidy amounts. When average benchmark premiums decline more sharply than overall average premiums, the result is higher after-subsidy premiums for some enrollees. This reduced affordability could be part of the reason Michigan’s exchange enrollment declined from 2019 to 2020.
Michigan’s exchange insurers implemented the following average rate changes for 2020:
- Blue Care Network (the HMO subsidiary of Blue Cross Blue Shield of Michigan): (157,381 members); 1.2 percent decrease
- Blue Cross Blue Shield of Michigan: (50,604 members) 7.7 percent decrease
- McLaren Health Plan: (2,653 members); 5.9 percent decrease
- Meridian: (7,094 members); 3.6 percent decrease
- Molina: (6,742 members); 8.8 percent decrease
- Physicians Health Plan: (7,624 members); 0.6 percent increase
- Priority Health (HMO and POS): (77,167 members) 0.1 percent decrease
- Total Health Care USA: (16,732 members) 2.5 percent decrease (more substantial than the 0.6 percent decrease the insurer initially proposed)
- Oscar Health: (648 members) 8.3 percent increase
In addition, two off-exchange-only insurers are offering plans: Alliance Health and Life, and Health Alliance Plan. Both kept their average rates unchanged from 2019 (after keeping them unchanged from 2018 as well). But those insurers have a very small segment of the total ACA-compliant individual market in the state, with a combined membership of fewer than 7,000.
Individual market insurers that offer on-exchange plans are continuing to add the cost of cost-sharing reductions (CSR) to on-exchange silver plans, the same way they did for 2018 and 2019.
Michigan exchange enrollment: 2014-2020
As is the case in the majority of the states that use HealthCare.gov, enrollment in Michigan’s exchange peaked in 2016 and has been declining since then. Enrollment in 2020 is nearly 24 percent lower than enrollment in 2016.
The enrollment decreases are due to a variety of factors, including increasing premiums, a shorter enrollment window (currently just over six weeks long, as opposed to three months or longer in earlier years), reduced federal funding for exchange marketing and enrollment assistance, the elimination of the individual mandate penalty (and prior to 2019, the public perception that the individual mandate might not be enforced), and the expansion of short-term health plans.
Here’s a summary of individual market enrollment totals in Michigan’s exchange during open enrollment each year:
- 2014: 272,539 people enrolled
- 2015: 341,183 people enrolled
- 2016: 345,813 people enrolled
- 2017: 321,451 people enrolled
- 2018: 293,940 people enrolled
- 2019: 274,058 people enrolled
- 2020: 262,919 people enrolled
Insurer participation in Michigan’s exchange
Time/Assurant and Consumer Mutual Insurance of Michigan both left the Michigan exchange at the end of 2015. Consumers Mutual was an ACA-created CO-OP that insured 28,000 members in 2015. They announced on November 2 — the day after the start of open enrollment for 2016 plans — that they would not sell policies on Michigan’s exchange in 2016, and that their existing on-exchange members would need to switch to a different carrier for 2016.
According to Crain’s Detroit Business, only a little more than a fifth of Consumers Mutual’s members purchased their plans in the exchange in 2015, and at that point, there was a possibility that the remaining 80 percent of the enrollees might be able to keep their plans, with the CO-OP continuing to offer plans outside the exchange.
But that hope was short-lived. By November 4, the announcement on Consumers Mutual’s website indicated that all enrollees — including those who had purchased their plans outside the exchange — would need to seek new coverage for 2016, and that the CO-OP would wind down its operations by the end of 2015.
Consumers Mutual enrolled just 29 percent of their projected membership in 2014, and had net losses of $16 million during the first year of operations. They were the 12th CO-OP (out of 23) to fail, and were among the majority whose closing was attributed to the fact that the federal government only paid out 12.6 percent of the risk corridor payments that were owed to carriers based on losses in 2014.
After Consumers Mutual folded and Time exited the market the Michigan exchange had 14 carriers offering coverage in 2016. That declined to ten for 2017 (although some of the decrease was due to PPO entities leaving the exchange, while their HMO sister companies remained in the exchange). The number of exchange insurers had dropped to eight by 2018, but grew to nine in 2019 when Oscar joined the exchange in Michigan. All nine insurers have filed plans to remain in the exchange for 2020. Insurer participation tends to be most robust in the southeastern part of the state, and less robust in Upper Michigan.
UnitedHealthcare exited the individual market in Michigan at the end of 2016, as was the case in most of the states where they offered plans in the exchange in 2016.
Harbor Health Plan exited the exchange at the end of 2016. They continued to offer one bronze plan off-exchange in 2017.
Priority Health Insurance Company, which offered PPO and POS plans in 2016, switched to only offering small group plans for 2017, and only outside the exchange. But Priority Health, which is a separate entity, has continued to offer individual and small group plans, on and off the exchange.
Health Alliance also dropped their PPOs, continued to offer more than 45 Personal Alliance HMO plans, both on and off-exchange (the PPOs were offered via Alliance Health and Life Insurance Company, which is a subsidiary of Health Alliance; Alliance Health and Life Insurance Company plans are no longer offered on the Michigan exchange). Blue Cross Blue Shield of Michigan was the only carrier still offering PPO plans through the Michigan exchange by 2017.
Humana dropped their individual PPO plans in Michigan at the end of 2016, but that only impacted the off-exchange market, as Humana’s on-exchange plans were already HMOs.
Humana exited the individual market entirely at the end of 2017, however, nationwide. In 2017, Humana’s coverage area included most of southeast Michigan, as well as Kalamazoo County and Kent County.
Health Alliance Plan (HAP) announced in September 2017 that they would not offer plans in the Michigan exchange for 2018, although their off-exchange plans continued to be available. HAP’s exit announcement noted that 9,100 members would have to find new plans. Their rate filing from earlier in the summer (when they were still planning to participate in the exchange) said that it would impact 17,000 members, but those with off-exchange coverage were able to keep their plans for 2018 if they wished to do so (HAP had 650,000 members in total in 2017, virtually all of whom had Medicare, Medicaid, or employer-sponsored coverage and were therefore not affected at all by the insurer’s decision to exit the exchange).
HAP noted in their announcement that the uncertainty caused by the Trump Administration and GOP-led Congress played a primary role in their decision to exit the exchange. They explained that the decision was based on “many uncertainties related to premium stabilization programs, enforcement of the individual mandate and not knowing whether the federal government will continue to fund cost-sharing reductions (CSRs).”
Oscar Health joined the exchange in Michigan for 2019 (in Wayne, Macomb, Oakland, St. Claire, Livingston, and Washtenaw counties), and all nine insurers continue to offer plans in the exchange for 2020. There are two off-exchange-only insurers (Alliance Health and Life, and Health Alliance Plan) offering plans in 2020. All of this will remain unchanged for 2021.
Premium changes in previous years
2014 was the first year that ACA-compliant plans were available, so actuaries didn’t have any claims experience on which to base rates for that year. The 2015 rates were based at least in part on claims experience in 2014, although they were filed in the spring and early summer of 2014, so it was only a few months of claims experience. Premiums began to be fully based on claims experience in 2016.
Numerous factors have affected premiums over the years, including the risk corridor shortfalls, the end of the ACA’s reinsurance program after 2016, the repeal of the individual mandate at the end of 2018 (and public perception that it wasn’t being enforced before that), the expansion of short-term plans, whether or not a state has expanded Medicaid, and overall utilization of health care. Here’s a look at how premiums (before subsidies are applied) in Michigan’s individual market have changed over the years.
2015: Average premiums in Michigan’s exchange decreased by 1 percent for 2015.
2016: In August 2015, the Michigan Department of Insurance and Financial Services (DIFS) announced that the weighted average rate increase in the individual market for 2016 would be 6.5 percent, although the average rates increase dropped lower than that once Consumers Mutual exited the market. The CO-OP had by far the highest average rate increase for 2016 of any of the exchange carriers in Michigan, at 20.5 percent (the next highest was UnitedHealthcare, at 14.7 percent), but the new rates never took effect since members had to switch to a different carrier for 2016.
Michigan’s average rate increase fo 2016 was about half as much as the average rate increases nationwide for 2016.
When we consider only the benchmark (second-lowest-cost Silver) plans across the state, the average increase in premiums in Michigan was 1.2 percent. That’s far lower than the 7.5 percent national average increase in benchmark plan premiums, although the change in benchmark premiums is not a particularly useful number for consumers, since the benchmark plan isn’t necessarily the same plan from one year to the next.
2017: The overall average rate increase in Michigan’s individual market was 16.7 percent for 2017 (including carriers that only offer off-exchange plans), the average benchmark plan premium (second-lowest-cost silver plan) is just 7 percent higher in 2017 than it was for 2016 in Michigan. The state is one of only nine that had single-digit increases in their average benchmark plan premiums for 2017. Subsidies are based on the cost of the benchmark plan, so they rose modestly in 2017 in Michigan.
2018: Due to the uncertainty over whether cost-sharing reductions (CSR) would be funded in 2018, the Michigan Department of Insurance required insurers to file two sets of rates for 2018 — one that assumed that cost-sharing reductions would be funded, and one that assumed they wouldn’t. Ultimately, the Trump administration cut off funding for CSR in October 2017, and insurers implemented the rates based on that scenario, with the cost of CSR added to silver plan premiums.
That amounted to a weighted average rate increase of 25.5 percent, but it would have been 17.6 percent if CSR funding had not been eliminated. The additional premium increase to cover the cost of CSR was added to silver plan premiums, and in most cases, Michigan residents were able to buy off-exchange silver plans that didn’t have the added cost of CSR built into their premiums. That’s useful for people who don’t get premium subsidies, but for people who do get premium subsidies, the subsidies grew significantly for 2018 to offset the higher silver plan premiums.
It’s notable that even for the rate filings that assumed ongoing funding for CSRs, a significant portion of the rate increase would still have been due to overall market uncertainty caused by the Trump administration and GOP legislative efforts in 2017 to undermine the ACA.
Background on Michigan’s exchange efforts
Former Gov. Rick Snyder, a Republican, supported a state-run exchange for Michigan. However, he did not have the support of enough fellow Republicans to move ahead.
The Michigan attorney general joined 25 other states in challenging the Affordable Care Act. The Senate passed a bill to authorize a state-run exchange, but the bill was voted down by the House’s Health Policy committee and didn’t get a floor vote.
Eventually, the state moved ahead with a state-federal partnership. Michigan is responsible for plan management, but left all other functions to the federal government.
When the King v. Burwell case was pending before the U.S. Supreme Court, Snyder again broached the topic of a state-run exchange to ensure Michigan residents have continued access to subsidies to pay for health insurance. Ultimately, the Court ruled that subsidies would continue to be available in every state, and Michigan did not have to consider a back-up plan to create a state-run exchange.
Michigan did accept federal funding to expand Medicaid under the ACA. Governor Snyder campaigned in 2014 on the success of the expansion program in the state, noting that Michigan had enrolled 63,000 more people than projected in 2014, just in the first eight and a half months of the year. From late 2013 until the spring of 2019, total enrollment in Medicaid and CHIP in Michigan grew by 21 percent — with enrollment up by about 397,000 people.
Michigan health insurance exchange links
Statewide network of non-profit agencies providing free enrollment support services to health insurance consumers
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.