State insurance regulators said Wednesday that dominant insurers Blue Care Network and Blue Cross Blue Shield want to raise rates by an average of 9.3 percent or 9.7 percent in 2015. The rate hikes are subject to change pending state review by Aug. 8, after which the federal government in the fall likely will approve whatever Michigan regulators decide.
Blue Care and Blue Cross sell policies to about three-quarters of nearly 246,000 Michigan affected residents who purchase their own insurance — either through a new website created under the federal health care law or off the "exchange."
Humana is the insurer with the third-most customers in Michigan's individual market and seeks an average 18 percent rate increase affecting 16,600 customers. Time Insurance and Total Health Care USA, the next-biggest players in the market with 14,000 and 13,500 affected customers, proposed 7.9 percent and 8.6 percent hikes on average.
Terry Burke, Blue Cross' vice president for individual business, said higher premiums are needed to account for rising medical costs and uncertainty over the influx of previously uninsured people covered through health overhaul.
"We've got a big influx of people and we don't know what their claims conditions are. The actuaries are concerned about that risk mix," he said.
Michigan's federally controlled insurance exchange is poised to grow, with more carriers — 18 — entering the market to compete for business, five more than last year. Sixteen submitted plans for the individual market and 11 offered plans for employers with up to 50 workers.
Some insurers with smaller numbers of enrollees in Michigan proposed average premium drops ranging from 2.7 percent to 21.6 percent.
The proposed premium hikes "are not final figures," said Caleb Buhs, spokesman for the state Department of Insurance and Financial Services. "We have to thoroughly review the rate plans and the rates themselves to ensure they're actuarially sound and there's adequate network coverage and take into account general public comments."
The companies' suggested rate increases are composites — some customers renewing their coverage will see bigger premium increases and others lower ones depending on where they live, if they smoke and other factors. They also may choose to move to a different plan altogether.
The estimated 246,000 state residents affected by the proposed rate increases is different from the 272,000 people that President Barack Obama's administration said signed up in the first enrollment period under the health law. The state figures do not include people who Obama let keep their individual insurance policies even if they are not compliant with the law and there also may be discrepancies in how insurers count policyholders, Buhs said.
Another factor could be that people who signed up on the exchange did not actually pay their insurance premiums.
Tax credits make insurance more affordable for many of the residents who enroll in a plan through the federal marketplace. Those subsidies are tied to a benchmark policy known as the second-lowest-cost silver plan.
The tax credits for 2015 will not be known until closer to the second annual enrollment period that opens Nov. 15.