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Michigan health insurance marketplace: history and news of the state’s exchange

Michigan insurers have proposed an overall average rate decrease of about 2.5% for 2020

Highlights and updates

Michigan exchange overview

State legislative efforts to preserve or strengthen provisions of the Affordable Care Act

How hard is Michigan fighting to preserve the Affordable Care Act’s provisions? Compare to other state-level efforts.

Michigan has a state-federal partnership exchange; the state oversees plan management, but is used for enrollment. Michigan expanded Medicaid under the ACA, and the exchange can enroll people in Medicaid or qualified health plans (QHPs), depending on their income.

Michigan has a robust exchange with nine insurers offering coverage for 2019 — including Oscar, which has joined Michigan’s market for 2019 — and all areas of the state have more than three insurers offering coverage for 2019.

And for 2020, Michigan’s insurers have proposed an overall average rate decrease of about 2.5 percent, coming on the heels of a very modest average rate increase of less then 2 percent for 2019.

The overall structure of the ACA, including premium subsidies and cost-sharing reductions, are still the same as they were before Trump took office. The Trump Administration eliminated funding for cost-sharing reductions, but the cost-sharing reductions themselves are still available to eligible enrollees. Rather than being funded directly by the federal government, the cost has been added to premiums in most states — typically just to silver plan premiums, as is the case in Michigan — and is mostly being covered by larger premium subsidies, paid by the federal government.

Although is no longer facilitating enrollment in small group health plans, Michigan is one of the states where there are still SHOP plans available for small businesses, albeit with enrollment conducted via the insurer rather than In Michigan, McLaren Health Plan still offers SHOP plans for small groups as of 2019 (that’s down from six insurers offering SHOP plans in 2016).

Michigan expanded Medicaid under the ACA, but the Trump Administration has since granted approval for Michigan to implement a Medicaid work requirement as of 2020. The proposal was submitted to CMS in September 2018 and approved by the federal government in December 2018. But while the waiver proposal was under review, voters in Michigan elected Gretchen Whitmer, a Democrat who is opposed to the Medicaid work requirement, to be Michigan’s governor. It’s unclear the extent to which Whitmer might be able to influence the implementation of the work requirement.

Michigan insurers have proposed an average rate decrease of 2.5% for 2020

Open enrollment for 2020 health insurance begins November 1, 2019 and will end December 15, 2019, with all plans effective January 1, 2020.

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). All 11 insurers have filed plans for 2020, with an overall average premium decrease of 2.5 percent (note that Charles Gaba at ACA Signups calculates the average rate decrease to be 2.05 percent). That comes on the heels of an average rate increase of just 1.7 percent in 2019 in Michigan’s individual market, so if approved, the proposed rate changes for 2020 would bring pre-subsidy premiums down below the level they were at in 2018.

Michigan’s exchange insurers have proposed the following average rate changes for 2019:

  • 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) 0.6 percent decrease
  • 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 have proposed keeping 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 will continue to add the cost of cost-sharing reductions (CSR) to on-exchange silver plans, the same way they did for 2018 and 2019.

In 2017, when it was unclear whether the federal government would continue to fund CSR, the Michigan Department of Insurance instructed insurers to file two sets of rates for 2018 — one assuming CSR funding would continue, and one assuming it wouldn’t (with the cost of CSR added to silver plan rates). Ultimately, the higher rates, with the cost of CSR added to silver plan premiums, were implemented. But there is no longer any uncertainty, as the federal government is no longer funding CSR.

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. This would be especially true if the Trump Administration hadn’t stopped funding CSR in late 2017.

Michigan exchange enrollment: 2014-2019

As is the case in the majority of the states that use, enrollment in Michigan’s exchange peaked in 2016 and has been declining since then. Enrollment in 2019 is more than 20 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:

HHS estimated that there were about 65,000 people in Michigan who had off-exchange coverage in 2016, but who would be eligible for subsidies if they switched to the exchange.

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 intend to continue to offer plans in the exchange for 2020. The two off-exchange-only insurers (Alliance Health and Life, and Health Alliance Plan) will both continue to offer plans only outside the exchange.

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 mid-October, and insurers implemented the rates based on that scenario, with the cost of CSR added to silver plan premiums).

Carriers had proposed the following average rate increases, with and without funding for cost-sharing subsidies (the higher average rates were ultimately implemented, but the increase stems from higher rates on silver plans; non-silver plan premiums were the same in both scenarios):

  • Blue Care Network (the HMO subsidiary of Blue Cross Blue Shield of Michigan): (116,476 members); 22.6 percent if CSR not funded; 13.8 percent if CSR had been funded. Blue Care noted that 5 percentage points of that was due to uncertainty in terms of whether the individual mandate would continue to be enforced, and “member behavior given the uncertainty of the market.”
  • Blue Cross Blue Shield of Michigan: (60,000 members) 31.7 percent if CSR not funded; 26.9 percent if CSR had been funded  (BCBSMI was the only carrier that offered PPO plans in the Michigan exchange for 2017, and they continued to offer PPO plans in 2018)
  • Health Alliance Plan: (17,000 members); 24 percent if CSR not funded; 16.1 percent if CSR are funded  (HAP decided not to offer exchange plans in Michigan in 2018, so their rate increase only applied off-exchange; on-exchange HAP members had to switch to a different insurer for 2018)
  • McLaren Health Plan: (2,999 members); 26.6 percent if CSR not funded; 11.9 percent if CSR had been funded
  • Meridian: (6,319 members); 59.4 percent if CSR not funded; 8.3 percent if CSR had been funded (Meridian’s rate filing indicates that they have “heavy enrollment in silver CSR plans” which explains the dramatic difference in the rate increase for the two scenarios).
  • Molina: (26,270 members); 42.8 percent if CSR not funded; 19.3 percent if CSR had been funded
  • Physicians Health Plan: (6,548 members); 22.8 percent if CSR not funded; 13.5 percent if CSR had been funded
  • Priority Health (HMO and POS): (100,680 members) 19 percent if CSR not funded; 17.7 percent if CSR had been funded
  • Total Health Care USA: (8,638 members) 27.59 percent if CSR not funded; 9.43 percent if CSR had been funded

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, it appears that 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 to undermine the ACA. A major factor was the individual mandate: when 2018 rates were being set in 2017, insurers assumed that the mandate wouldn’t be strongly enforced in 2018, which means their risk pools will be sicker (since healthy people will be the most likely to forego coverage) and they accounted for that in their pricing. If insurers had been confident that the individual mandate would be enforced, average rate increases would have been smaller for 2018. The GOP tax bill, which was enacted in December 2017, after the end of open enrollment for 2018 coverage, repealed the individual mandate penalty, but not until 2019.

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

Enroll Michigan
Statewide network of non-profit agencies providing free enrollment support services to health insurance consumers

Michigan Health Insurance Consumer Assistance Program (HICAP)

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 Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.