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

Market remains robust; 9 insurers have filed plans for 2018

Michigan has a state-federal partnership exchange; the state oversees plan management, but Healthcare.gov 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.

Although Michigan has a robust exchange with 10 insurers offering coverage in 2017, insurer participation is somewhat concentrated in the southeast part of the state, where four to eight insurers offer coverage in each county. Upper Michigan, however, has just one (Blue Cross Blue Shield of Michigan). Humana is exiting the individual market entirely at the end of 2017, nationwide, which means their plans will not be available in the Michigan exchange when open enrollment begins again on November 1, 2017. In 2017, Humana’s coverage area includes most of southeast Michigan, as well as Kalamazoo County and Kent County.

321,451 people enrolled in private plans through the Michigan exchange during the 2017 open enrollment period (November 1, 2016 through January 31, 2017). The 2017 enrollment total was 7 percent lower than the 2016 total, when 345,813 people enrolled. Across the states that use HealthCare.gov, total enrollment was down about 4.7 percent for 2017, due in part to uncertainty about the future of the ACA, and the Trump Administration’s move to scale back advertising and outreach for HealthCare.gov in the final week of open enrollment.

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. Although the future of the ACA is very much up in the air, subsidies are still available through the exchange, and you can still enroll in coverage for 2017 if you experience a qualifying event.

2018 rate proposals: with and without cost-sharing reduction funding

Due to the uncertainty over whether cost-sharing reductions (CSR) will be funded in 2018, the Michigan Department of Insurance required insurers to file two sets of rates for 2018 — one that assumes that cost-sharing reductions will be funded, and one that assumes they won’t. The rate filings are in SERFF; carriers have proposed the following average rate increases, with and without funding for cost-sharing subsidies:

  • Blue Care Network: (116,476 members); 22.6 percent if CSR not funded; 13.8 percent if CSR are funded. Blue Care notes that 5 percentage points of that is due to uncertainty in terms of whether the individual mandate will 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 are funded  (BCBSMI is the only carrier offering PPO plans in the exchange for 2017)
  • Health Alliance Plan: (17,000 members); 24 percent if CSR not funded; 16.1 percent if CSR are funded
  • McLaren Health Plan: (2,999 members); 26.6 percent if CSR not funded; 11.9 percent if CSR are funded
  • Meridian: (6,319 members); 59.4 percent if CSR not funded; 8.3 percent if CSR are funded (Meridian’s rate filing indicates that they have “heavy enrollment in silver CSR plans” which explains the dramatic difference in the rate increase if CSR are funded versus if they aren’t).
  • Molina: (26,270 members); 42.8 percent if CSR not funded; 19.3 percent if CSR are funded
  • Physicians Health Plan: (6,548 members); 22.8 percent if CSR not funded; 13.5 percent if CSR are funded
  • Priority Health (HMO and POS): (100,680 members) 19 percent if CSR not funded; 17.7 percent if CSR are funded
  • Total Health Care USA: (8,638 members) 27.59 percent if CSR not funded; 9.43 percent if CSR are funded

That works out to a weighted average proposed rate increase of 25.5 percent if cost-sharing reductions are not funded, and a 17.6 percent weighted average proposed increase if CSR funding is committed for 2018.

It’s notable that even for the rate filings that assume ongoing funding for CSRs,  a significant portion of the rate increase is due to overall market uncertainty caused by the Trump Administration and GOP legislative efforts to undermine the ACA. A major factor is the individual mandate: insurers are assuming that it won’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’re accounting for that in their pricing. If insurers were confident that CSRs would continue to be funded in 2018, and that the individual mandate would be enforced, average rate increases would be well below the currently proposed levels.

Michigan exchange and the future of the ACA

House Republicans passed the American Health Care Act (AHCA) in early May, and sent it to the Senate. The AHCA did include replacements for some ACA provisions, but there are concerns that premium subsidies wouldn’t be as strong under the AHCA, and that federal funding for Medicaid would be significantly reduced over time, resulting in states having to cut benefits and eligibility in their Medicaid programs (to be clear, those were concerns for moderate Republicans in the House; the ultra-conservative House Freedom Caucus was also initially opposed to the AHCA because it didn’t go far enough in fully repealing the ACA).

The Senate, in an entirely partisan process, has drafted their own version of the legislation, titled the Better Care Reconciliation Act (BCRA). The legislation was introduced in June, but an updated version was introduced in July (side-by-side comparison here). Senate Majority Leader, Mitch McConnell, is pushing for a vote within a week, although it’s unclear if there will be enough Republican support to proceed with the vote.

HHS estimates that 618,000 Michigan resident gained health insurance coverage from 2010 to 2015, as a result of the ACA (the state’s uninsured rate was cut in half, from 12 percent to 6 percent, between 2009 and 2015). And the number of people who have gained coverage has continued to increase since 2015, especially via Medicaid expansion. At ACA Signups, Charles Gaba estimates that 956,000 people in Michigan are at risk of losing their health insurance without the ACA.

In 2017, almost 81 percent of Michigan exchange enrollees are receiving premium subsidies. That’s about 260,000 people whose premiums are being partially offset by tax credits in the exchange. The BCRA would continue to provide premium tax credits, but they would be based on requiring older enrollees, and enrollees with income above about 250 percent of the poverty level, to pay a larger share of their income for benchmark premiums than they do under the ACA. And notably, the benchmark plan would be a bronze plan, instead of a silver plan. According to a CBO analysis of the bill, the average silver plan premium in 2017 has a deductible of $3,600, while the average bronze plan has a deductible of $6,000. So the BCRA would require many enrollees to pay a larger share of their income in premiums, for coverage that’s far less robust.

Medicaid expansion in Michigan (Healthy Michigan) had grown to 664,884 by mid-July 2017, and their coverage is being funded mostly by the federal government. In 2017, the federal government is paying 95 percent of the cost of covering the Medicaid expansion population; that’s scheduled to drop to 90 percent in 2020, but will not fall below that level as long as the ACA remains in place. The BCRA would begin to reduce the enhanced federal funding for Medicaid expansion in 2020, and it would be eliminated by 2024. Importantly, the bill would also reduce regular Medicaid funding sharply (by 2036, funding would be 36 percent lower under the BCRA than under current law), which would result in states having to reduce eligibility and benefits for their existing Medicaid populations.

For the time being, nothing has changed. HHS has finalized a shorter enrollment period for 2018 (starting November 1, 2017 and ending December 15, 2017), and pre-enrollment eligibility verification for anyone who enrolls outside of open enrollment (ie, proof of a qualifying event would need to be submitted in order to complete the enrollment). But plans and subsidies for 2017 are still the same as they were before Trump’s election win, and any legislative changes that might be made in 2017 will have implementation dates that are pushed out to 2018 at the earliest, and likely 2019 or later.

Fewer carriers in 2017, but a robust exchange with lots of plan options

The Michigan exchange had 14 carriers offering coverage in 2016, and 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). But ten carriers is still far more robust than most states, and Michigan residents still have a significant amount of choice in their health care coverage for 2017. Advocates note that there are 167 plan options in the exchange in 2017, up from 70 in 2014 (there were 13 participating insurers that year). And although rates went up for 2017, the increase wasn’t as sharp as the national average.

As noted above, insurer participation tends to be most robust in the southeastern part of the state, while Upper Michigan has just one participating insurer in the exchange.

Here’s what changed for 2017:

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. Their plans are not for sale on or off-exchange.

Priority Health Insurance Company, which offered PPO and POS plans in 2016, is only offering small group plans for 2017, and only outside the exchange. But Priority Health, which is a separate entity, is continuing to offer individual and small group plans, on and off the exchange, and is offering both HMO and POS plans for 2017.

Health Alliance also dropped their PPOs, but is continuing to offer more than 45 Personal Alliance HMO plans, both on and off-exchange. Blue Cross Blue Shield of Michigan is the only carrier that’s still offering PPO plans in 2017 through the Michigan exchange.

Harbor Health Plan exited the exchange at the end of 2016. They are continuing to offer one bronze plan off-exchange in 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 is exiting the individual market entirely at the end of 2017, nationwide, so their plans will not be available for 2018. In 2017, their coverage area includes most of southeast Michigan, as well as Kalamazoo County and Kent County.

2017 rate increases

The following average rate increases were approved for the carriers that are offering individual coverage through the Michigan exchange for 2017:

  • Blue Care Network: 14.8 percent
  • Blue Cross Blue Shield of Michigan: 18.7 percent (BCBSMI is the only carrier offering PPO plans in the exchange for 2017)
  • Health Alliance Plan: 16.8 percent
  • Humana: 39.2 percent (leaving the individual market at the end of 2017)
  • McLaren Health Plan: 12.2 percent
  • Meridian: 9.3 percent
  • Molina: 3.2 percent
  • Physicians Health Plan: 6.7 percent
  • Priority Health (HMO and POS): 13.9 percent
  • Total Health Care USA: 7.2 percent requested increase

For all of the on-exchange carriers, rates were approved as requested. The rate review process resulted in some slight changes to the proposed rate changes for off-exchange carriers.

Although 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. Given the robust market and depth of plan choice, and given the fact that some plans have rate increases that are quite a bit larger than the average benchmark increase, it was essential for Michigan residents to shop around during open enrollment, and switch plans if necessary to get the best value in 2017.

2016 enrollment

345,813 people enrolled in private plans through the Michigan exchange during the 2016 open enrollment period, including new and renewing enrollees. Total enrollment at the end of the 2015 open enrollment period stood at 341,183, so 2016’s enrollment was an increase of about 4,600 people.

But the actual increase was more significant than that, because 2016 is the first year that Healthcare.gov began accounting for attrition in real-time, while open enrollment was ongoing; the enrollment total already reflected policy cancellations (including unpaid premiums) as of February 1.

Open enrollment ended January 31. For the rest of the year, 2016 coverage (including outside the exchange) is only available for purchase if you experience a qualifying event. Examples of qualifying events include getting married or divorced, having a baby, or adopting a child, and Healthcare.gov began requiring proof of qualifying events in 2016. However, Native Americans can enroll year-round, as can anyone eligible for Medicaid or CHIP.

Consumers Mutual CO-OP closed

Consumers Mutual Insurance of Michigan 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 (Healthcare.gov) 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.

On November 4, I talked with Michigan’s Department of Insurance and Financial Services (DIFS) about Consumers Mutual, and they confirmed that the initial decision to exit the exchange came from the CO-OP, not from state regulators. For most of the CO-OPs that have folded completely over the past year (the majority in late 2015), state Insurance Commissioners essentially ordered them to wind down operations amid dwindling reserves and potential insolvency.

But CEO Dennis Litos had confirmed that the CO-OP was reviewing its financial situation in conjunction with DIFS, and that one of the possibilities that was being considered was fully closing the CO-OP. Ultimately, that’s what DIFS and Consumers Mutual determined would be the most prudent course of action.

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 are 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.

6.5% premium increase for 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.

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.

In 2015, average premiums in Michigan’s exchange decreased by 1 percent. Relative to that, the 2016 rate changes were much higher, but they were still about half as much as the average rate increases nationwide for 2016 (for 2017, the average proposed rate increase is roughly 17 percent). You can see 2016 exchange premiums by insurance carrier, metal level, age, and smoking status in a document prepared by DIFS.

In Michigan’s small group market, average premiums increased by just one percent for 2016.

In August 2015, DIFS released a user-friendly chart showing each carrier’s proposed and approved rate change, along with whether or not the carrier sells plans in the exchange, and how many enrollees each carrier had at that point. In every case, the rates were approved as-proposed, although HealthPlus Insurance Company (off-exchange) had proposed a 38 percent rate increase and later withdrew their request, and Time Insurance Company also withdrew their proposed 37 percent rate increase, after their parent company announced their plans to exit the health insurance market nationwide. But no rate adjustments were made by DIFS during the review process.

Blue Care Network of Michigan and Blue Cross Blue Shield of Michigan had the majority of the individual market enrollees in Michigan in 2015 (65 percent combined, including on and off-exchange). Blue Care Network’s average rate increased by 9.7 percent, while BCBS of Michigan had an average rate increase of 11.4 percent.

Michigan’s individual health insurance market is one of the most robust in the country. There are 14 individual carriers that are offering roughly 200 plans for sale in the Michigan health insurance exchange for 2016 (two carriers – Time and Consumers Mutual – that offered exchange plans in 2015 have exited the market and are not offering plans for 2016). An additional six carriers are only offering plans outside the exchange.

Small group health insurance

For 2017, the average rate increase in the small group market is just 2.5 percent. But although the overall market is very robust, there are only three carriers that will continue to offer plans in the Michigan small business (SHOP) exchange in 2017: Blue Care Network of Michigan, Blue Cross Blue Shield of Michigan, and McLaren Health Plan Community.

That’s a decrease from six carriers that offered small business coverage in the exchange in 2016.

From 2013 to 2014, the percentage of Michigan small businesses (with fewer than 50 employees) offering health insurance dropped from 40 percent to 33 percent. But the lower rate is more in line with the historical average in Michigan, and is slightly higher than the 32 percent average nationwide. Small businesses with fewer than 50 full-time equivalent employees are not required to offer health insurance under the ACA. But if they do, they can use the SHOP exchange, and may qualify for small business health insurance tax credits if they do.

King v. Burwell – subsidies are safe

In June 2015, the Supreme Court ruled that subsidies are legal in every state, regardless of whether the exchange is run by the state or the federal government.  The Kaiser Family Foundation estimated that if the King plaintiffs had won, premiums would have increased by an average of 294 percent for people who had been receiving subsidies in Michigan. And individual market enrollees who weren’t receiving premium subsidies would have seen rate increases of 60 – 90 percent in 2016 due to market destabilization that would have occurred had the subsidies been eliminated.

Following the Court’s ruling, Michigan Governor Rick Snyder saidWe appreciate that the deep uncertainty of this issue has been resolved. The health and wellbeing of the people of Michigan is always a top priority. Our focus can now center on securing the second waiver for our Healthy Michigan Plan, which has been an outstanding success.

Healthy Michigan Plan waiver, round 2

Snyder referenced the Healthy Michigan Plan waiver in his address after the King v. Burwell opinion because a ruling for the King plaintiffs would have been very detrimental for the state’s efforts to secure the waiver, and for the future of Michigan’s Medicaid expansion program.

Michigan’s Medicaid expansion program had enrolled 664,580 people in coverage by mid-April 2017. The state expanded Medicaid under the ACA (effective April 2014), but it did so with a waiver, rather than straight expansion, because the state requires enrollees with incomes between 100 percent and 138 percent of the poverty level to contribute 2 percent of their income to health savings accounts (only about a fifth of the program’s enrollees have income above the poverty level). The program also allows participants to lower their cost-sharing based on participation in healthy behavior programs.

But a second waiver was required at the end of 2015, because under a state law enacted in 2013, Medicaid expansion for able-bodied adults is limited to 48 months for people with incomes between 100 percent and 138 percent of the poverty level. After that, they have the option of switching to subsidized private coverage in the exchange, OR staying in the Medicaid program but paying higher cost-sharing (up to 7 percent of household income, as opposed to the 5 percent cap normally imposed for Medicaid).

By the end of 2015 the state had to gain approval from the federal government to implement the program that calls for higher cost-sharing or a transition to subsidized coverage in the exchange after 48 months. Because subsidies were in limbo pending the outcome of the King case, the re-approval of the Medicaid waiver in Michigan was also in jeopardy prior to the Supreme Court’s ruling.

On September 1, 2015, Michigan submitted their waiver to CMS, and it was approved in mid-December. If it had not been approved, the Healthy Michigan program would have ended by April 30, 2016. This is despite the fact that less than 20 percent of the Medicaid expansion population in Michigan would be impacted by the state’s requirement that higher-income Medicaid beneficiaries would only be eligible for 48 months of coverage – if the waiver had not been approved, Medicaid expansion in the state would have terminated entirely.

In order to fund the state’s portion of Medicaid costs, Michigan imposes a 0.75 percent assessment (increasing to 1 percent in 2017) on health insurance carriers and third-party administrators. The assessment was scheduled to expire at the end of 2017, but HB5105, introduced in December 2015, extends the assessment out through 2020. HB5101 was passed by Senate in February 2016 and Governor Snyder signed it into law in March. Without the extension of the assessment, Michigan would have been in danger of losing federal matching funds for Medicaid costs, since their ability to pay the state portion of the costs would have been in jeopardy. Whether or not the assessment will continue to apply to self-insured health plan claims remains to be seen, as it’s the subject of an ongoing legal battle.

2015 enrollment

Michigan residents had pent-up demand for health insurance. Enrollment in both marketplace plans and Healthy Michigan, the state’s revamped Medicaid program, “blew through” projections for 2014 and beyond.

And, 2015 marketplace enrollment was even higher than the prior year’s. 341,183 Michigan residents selected a health plan on HealthCare.gov between Nov. 15, 2014, and Feb. 22, 2015.

Forty-two percent of those signing up were new to the marketplace for 2015. Eighty-eight percent of Michigan residents who selected a health plan qualified for financial assistance, which is just one point higher than the average for all states that use HealthCare.gov.

As expected, some enrollees didn’t pay their initial premiums, and others opted to cancel their coverage early in the year. HHS also stepped up enforcement of documentation requirements for immigration status and premium subsidies. By the end of June, 288,751 people had effectuated coverage in private plans through the Michigan exchange. Nearly 78 percent were receiving premium subsidies, and 54 percent were receiving cost-sharing subsidies.

Despite the robust enrollment, a University of Michigan study found that insureds – both those with Medicaid and those with private insurance – experienced no significant decrease in availability of primary care appointments following implementation of the ACA.  In fact, for those with Medicaid, appointment availability actually increased from 2013 to 2014.

Transitional plans

Although Michigan is allowing insurers to extend transitional, or “grandmothered,” health plans until as late as December 2018 , some insurers opted to discontinue their offerings in 2015. Grandmothered plans are not fully compliant with the ACA.

If you receive a notice that your plan is being canceled, you have several options. You can shop for new coverage directly through your current carrier, through an agent or broker, or through the marketplace at HealthCare.gov.

Penalties increased again for 2016, remain flat in 2017

The ACA’s individual mandate requires most people to have health insurance or pay a penalty; however, there are quite a few exemptions.

For 2016, the penalty increased to the greater of:

  • 2.5% of annual household income above the tax filing threshold (the national average cost for a bronze plan in 2016 will be determined by the IRS once rates are finalized),
  • $695 per adult and $347.50 per child under 18.  Using this method, the maximum amount a family will pay is $2,085

The penalty remains unchanged in 2017 (the flat rate penalty is scheduled to be adjusted for inflation after 2016, but there was no inflation adjustment for 2017) Use the healthinsurance.org calculator to see if you may have to pay a penalty.

2014 enrollment recap

More than 272,500 Michigan residents signed up for qualified health plans during the first open enrollment period. Eighty-seven percent qualified for financial assistance, compared to 85 percent nationally. An HHS report shows the average monthly premium, after tax credits, for Michigan consumers as $97. Thirty-nine percent of enrollees paid $50 or less per month after subsidies.

Thirteen percent of Michigan residents selected a bronze plan (20 percent nationally), 75 percent selected a silver plan (65 percent nationally), 9 percent selected a gold plan (9 percent nationally), 2 percent selected a platinum plan (5 percent nationally) and 2 percent selected a catastrophic plan (2 percent nationally). Twenty-eight percent of Michigan enrollees were between the ages of 18 and 34.

Background on Michigan’s exchange efforts

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 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 December 2015, total enrollment in Medicaid and CHIP in Michigan grew by 19 percent.

Michigan health insurance exchange links

HealthCare.gov
800-318-2596

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

Michigan Health Insurance Consumer Assistance Program (HICAP)
877-999-6442

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