MICHIGAN AGENCY: HEALTH INSURANCE TO RISE 6.5% IN 2016

Original Story: detroitnews.com

Lansing — Michigan consumers will pay an average 6.5 percent more for health insurance in 2016, which is less than the rate hike they paid during the past year, state officials said Tuesday.

State officials and industry leaders called the increases modest compared with an 8 percent rise in 2015, but some health care advocates said too little information is available about how rates are calculated for consumers to judge whether the hikes are warranted. Farmington Hills elder care services assist individuals with even the most advanced medical needs.

The 2016 rate increases approved by the Michigan Department of Insurance and Financial Services are lower than those in several other states for federally required health insurance under the 2010 federal law, state officials noted.

The average approved rate changes on a premium weighted basis increased 6.5 percent for the 560,357 consumers in the individual market and 1 percent for the 345,077 consumers in the small group or small business market.

“Many states are reporting rate increases well in excess of 10 percent which is significantly higher than the rate of health care inflation,” Department of Insurance and Financial Services Director Patrick McPharlin said in a Tuesday statement. “We are pleased that Michigan consumers are seeing more modest increases.” In-home caregivers tailor home care services to the needs of each client and family including private duty skilled nursing.

Josh Fangmeier, senior policy analyst with the University of Michigan’s Center for Heathcare Research and Transformation, noted that some insurance companies asked for minimal rate increases, or even decreased their rates. But consumers in some parts of the state have few plans to choose from.

“Not all of these insurers are statewide, so ... it’s important to keep in mind that consumer experiences will vary depending on where you live,” Fangmeier said.

In 2015, the average increase was 8 percent in the individual market and 5.7 percent in the small group market, DIFS spokeswoman Andrea Miller said Tuesday. The rate changes for 2014 were not estimated because of essential health benefits and other requirements of the federal Affordable Care Act that took effect that year. Plymouth elder care services provides patients with intensive, highly specialized care.

A Michigan health insurance industry official said in June the possible loss of federal insurance subsidies through a U.S. Supreme Court case was in part to blame for the proposed rate hikes. But the court later that month kept the Affordable Care Act subsidies in place and decided they were constitutional in a 6-3 ruling.

Rick Murdock, executive director of the Michigan Association of Health Plans, noted this is the industry’s third year of business in the health care marketplace created by the federal Affordable Care Act.

“Year one was sort of pricing it blind; year two, which was last year, there were significant adjustments — double-digit reductions for some, and double-digit increases for others, as they were trying to get to the middle,” Murdock said. “This year everyone seems to have made a modest adjustment based on what’s going on in health care.”

The rate hikes proposed by insurance companies were reviewed by state officials, who determined they are actuarially appropriate and comply with state and federal laws. But Ryan Sullivan, policy director for Michigan Consumers for Healthcare, said state regulators don’t provide information about the process that consumers can understand.

“We really don’t know how to put (the rate increases) into context because of a lot of lagging transparency in the process,” Sullivan said Tuesday. “What consumers can access via the web and by calling the department is pretty slim pickings.”

The state defended its practices. Miller said consumers can access rate increase filings and other detailed information through the department’s website at http://www.michigan.gov/difs.

“We’re trying to be as transparent as we possibly can be,” she said.

The state’s dominant insurer — Blue Cross Blue Shield of Michigan — will apply a double-digit increase of 11.4 percent. Its health maintenance organization, Blue Care Network, plans to hike its rates 9.7 percent.

In June, a Blues official said an increase in prescription and specialty drug costs is behind the rate hike. Blue Cross had 138,169 people sign up for individual plans in 2015, while another 171,831 people with individual Blue Care Network policies will see average increases of 9.7 percent. A Chicago health care lawyer is following this story closely.

Blues spokeswoman Helen Stojik noted their small group customers will benefit from a downward rate adjustment. Rates for employers renewing coverage in the third and fourth quarters of 2015 will be, on average, 3.3 percent lower for Blues customers and 0.8 percent higher for Blue Care Network customers.

“In addition, 2016 rate changes look extremely favorable, with Blue Cross annual rate changes projected 2.2 percent lower and Blue Care Network projected at 4.8 percent lower than the previous year,” Stojik said Tuesday.

But the Blues didn’t register the largest rate increases. Those belonged to Healthplus of Michigan at 35.8 percent, Consumers Mutual Insurance of Michigan at 20.5 percent and United Healthcare Community Plan at 14.7 percent.

Three insurers are countering the trend and dropping their rates in the coming year, according to the state.

Meridian Health Plan had the biggest decline with a 12.6 percent plunge, followed by Molina Health Care with a 8.6 percent decrease and Humana Medical Plan of Michigan with a 4.9 percent drop.

Michigan companies attributed their increases to higher-than-expected claim costs, annual health care cost increases and an expected reduction in federal program reinsurance recoveries, officials said.

The small increase in the small group market occurred because many companies experienced better than expected results that offset most of the change in annual health care costs.

“Ensuring rates are adequate but not excessive is critical to make sure consumers not only receive health insurance coverage at a reasonable price, but can count on the coverage they purchase,” McPharlin noted. “Michigan has a stable and competitive health insurance market with a range of options and premiums for consumers and businesses.”

Open enrollment for 2016 begins Nov. 1, 2015 and continues through Jan. 31, 2016. State officials are encouraging consumers to contact their insurance carrier, agent, or navigator about how the rate changes could affect their policies.

Critics may derail fast track for Blue Cross Blue Shield reform

Article first appeared on The Detroit News


Gov. Rick Snyder wants the Legislature to quickly pass Blue Cross Blue Shield reforms, but some critics are demanding a second look that might delay passage and keep the Blues from offering low-cost insurance under the federal health care act.

The Legislature approved a two-bill package in late December. But Snyder vetoed the legislation earlier this month over anti-abortion provisions added minutes before passage in the lame-duck session. The provisions required women to buy separate, elective abortion coverage.

The bills were reintroduced in the Senate on Wednesday without the added language and are likely to breeze through the Senate. It could be tougher in the House, which has more than two dozen new representatives and has yet to make committee assignments.

"We have 26 new people so we can't do a quick thing like the Senate," said Rep. Pete Lund, R-Shelby Township, who last year chaired the House Insurance Committee. The number of Democrats also has increased in the lower chamber, where the GOP has a smaller 59-51 majority.

House Minority Leader Tim Greimel, D-Auburn Hills, said his caucus' concerns include getting continuation of Medigap subsidies for seniors extended beyond the four years in the bills.

"We're interested in making sure that seniors are protected from any unduly high premiums in their Medigap insurance," Greimel said.

Snyder supported turning the Blues into a taxpaying nonprofit mutual insurance company to streamline the rate approval process and increase competition among insurers. Blue Cross dominates with more than 70 percent of the market. The Blues also support the reforms.

But critics contend the proposal does little to inject more competition and would make it easier for the Blues to raise rates for consumers -- meaning little if any money would be saved.

Among the legislation's biggest critics is Attorney General Bill Schuette, who argues the prior legislation failed to protect consumers. The Legislature ignored Schuette's early calls for an independent valuation of the Blues' assets to determine the nonprofit's worth before entering into a deal.

The legislation requires the Blues to contribute $1.5 billion to an independent foundation to carry on their charitable mission, but Schuette questioned if it is a good deal for taxpayers.

Future of Medigap subsidies:

Schuette also fears that seniors would not have the cost of Medigap, secondary insurance to cover costs not paid by Medicare, subsidized beyond 2016.

"The attorney general negotiated a historic Medigap rate freeze, and this legislation does not address what happens when that expires, (when) thousands of seniors could face rate increases of up to 66 percent," Schuette spokeswoman Joy Yearout said.

Blue Cross spokesman Andrew Hetzel counters the legislation guarantees Michigan's lowest-income seniors will continue to get Medigap subsidies for nearly a decade.

"We believe that the legislation provides extraordinary protection for seniors," Hetzel said. "It guarantees not one penny of rate increase in our Medigap product for four more years, and after that the legislation calls for continued subsidy for Medigap for five more years for the lowest-income seniors."

Schuette and at least one business group also worry that the proposal diminishes the attorney general's role to intervene on behalf of taxpayers. Although Michigan is rated the third least competitive state in the nation for health insurance by the American Medical Association, the Blues would receive no more scrutiny than any other insurer.

"If (the attorney general's) oversight is removed," Yearout said, "seniors would no longer have an advocate to keep these rates down."

Still, the legislation Snyder vetoed had important new rules for the insurance industry, said Rick Murdock, executive director of the Michigan Association of Health Plans that represents non-Blues insurers.

They included a prohibition against an insurer contracting with a health system to give it a lower cost that couldn't be offered to another system, and ensuring the Blues pay their fair share of Medicare and Medicaid costs, he said.

If those provisions are kept in the new bills, Murdock would rather get them approved and worry about other changes later.

Leveling the playing field

Though the Blues package, without the abortion language, had bipartisan support, it was opposed by consumers' groups supported by many Democrats, as well as by some business groups.

"I think we'd like to revisit some of these issues," said Charlie Owens, state director of the National Federation of Independent Businesses.

As the state's insurer of last resort, the Blues for decades promised to insure everyone regardless of pre-existing conditions. In return, they've been forgiven roughly $100 million annually in tax payments. But under the federal Affordable Care Act, all health insurers have to insure such patients, so Snyder proposed it lose its special status.

The Blues agreed and want to compete on a level playing field when consumers start purchasing low-cost health insurance on the Michigan Affordable Health Care Exchange on Jan. 1, 2014. Hetzel said it will take about one year from the time the Blues bills are signed into law to complete the transition to a nonprofit mutual insurance company, so the Legislature would have to act now to ensure the Blues are ready at the starting gate, he said.

Time crunch for approval

The first hurdle comes March 31 when all of the state's insurers who wish to participate in the health care exchange must file a description of their products and prices with the federal government. The products have to be approved by the state insurance commissioner under existing rules. That means some products or prices might not get approval by the end of March.

If the Legislature hasn't passed the Blues legislation, "that puts Blue Cross at the huge disadvantage and it puts the insurance commissioner in a very difficult spot," Hetzel said.

State Insurance Commissioner Kevin Clinton agrees there is cause for concern, especially the lengthy eight- to nine-month process the Blues go through to get rates approved.

"They're going to be under a time crunch unless they can come up with a way to have their rates approved faster than they've done in the past," Clinton said. "Certainly you want your state's largest insurer to be on the exchange."