6.5% premium increase for 2016
On August 18, 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. For the small group market, however, average premiums will increase by just one percent.
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 has. 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 that they would be exiting the individual market. Otherwise, no rate adjustments were made by DIFS during the review process.
Blue Care Network of Michigan and Blue Cross Blue Shield of Michigan have the majority of the individual market enrollees in Michigan (65 percent combined, including on and off-exchange). Blue Care Network’s average rate is decreasing by 1.6 percent, while BCBS of Michigan will have an average rate increase of just 1.7 percent.
There are 15 individual carriers that will be offering plans for sale in the Michigan health insurance exchange during the upcoming open enrollment period (November 1 to January 31). An additional six carriers are only offering plans outside the exchange. The same open enrollment period applies both on and off the exchange.
In the small group market, the majority of the carriers are only offering plans outside the exchange, but six carriers will be participating in the Michigan SHOP exchange for 2016.
King v. Burwell – subsidies are safe
On June 25, 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. That means subsidies for 259,000 people in Michigan are safe, and will continue to be available during the upcoming open enrollment period that starts November 1.
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. And individual market enrollees who weren’t receiving premium subsidies would have seen rate increases of 60 – 90 percent next year due to market destabilization that would have occurred had the subsidies been eliminated.
Following the Court’s ruling, Michigan Governor Rick Snyder said “We 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
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 has enrolled 600,000 people in coverage so far. The state expanded Medicaid under the ACA, but it did so with a waiver, rather than straight expansion, because the state requires enrollees with incomes between 100 percent and 133 percent of the poverty level to contribute 2 percent of their income to health savings accounts. And 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 133 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.
The waiver for Medicaid expansion was initially approved, but by the end of 2015 the state must 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 – but that obstacle no longer exists.
On September 1, Michigan submitted their waiver to CMS, and the agency will respond by December. Officials in Michigan are optimistic that the waiver will be approved, but if it’s not, the Healthy Michigan program will end next spring, by April 30.
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 is even higher than last year’s. More than 341,000 Michigan residents selected a health plan on HealthCare.gov between Nov. 15, 2014, and Feb. 22. 293,843
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. By the end of March, 293,843 people had effectuated coverage in private plans through the Michigan exchange. Nearly 78 percent were receiving premium subsidies, and 55 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.
Open enrollment to buy health insurance through the marketplace ended Feb. 15 this year. If you missed open enrollment, you can still sign up for 2015 coverage if you experience a qualifying event. Examples of qualifying events include getting married or divorced, having a baby, or adopting a child. Open enrollment will begin again for everyone in the individual market on November 1, for coverage effective January 1, 2016.
Insurers and rates on 2015 exchange
Sixteen insurers are selling policies through the Michigan exchange for 2015 coverage, up from 12 in 2014 according to HHS. All insurers that participated in 2014 stayed in the marketplace for 2015, and four carriers are new.
Data gathered by the Commonwealth Fund shows 2015 premiums decreased 1 percent on average for marketplace plans.
Although Michigan is allowing insurers to extend transitional, or “grandmothered,” health plans for several more years, some insurers opted to discontinue their offerings in 2015. These are plans that don’t meet ACA requirements, but have been allowed to stay in effect awhile longer.
If you receive a notice that your plan is being cancelled, 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. You can also see if you qualify for a hardship exemption, or skip coverage and run the risk of owing a penalty.
Penalties increasing again for 2016
The ACA’s individual mandate requires most people to have health insurance or pay a penalty; however, there are quite a few exemptions.
Those who don’t qualify for an exemption and remain uninsured in 2015 will have to pay the greater of:
- 2% of annual household income above the tax filing threshold. The maximum penalty is the national average cost for a bronze plan, which in 2015, is $207 per month for an individual ($2,484 for the year), or $1,035 per month ($12,420 for the year) for a family with five or more uninsured members.
- $325 per adult and $162.50 per child under 18. Using this method, the maximum amount a family will pay is $975.
For 2016, the penalty is increasing 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
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. 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 pay $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.
Given the King v. Burwell case 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. The Kaiser Family Foundation estimates that 676,026 Michigan residents would miss out on subsidies in 2016 if the court rules against subsidies in states that use the federal marketplace.
Michigan health insurance exchange links
Statewide network of non-profit agencies providing free enrollment support services to health insurance consumers