Detroit-based Health Alliance Plan announced today it will stop offering individual plans next year on the Affordable Care Act’s insurance marketplace, citing unstable premiums and uncertainty whether the Trump administration will continue subsidies and enforce the mandate that everyone buy health insurance.
HAP’s exit from the Obama-era law’s marketplace will leave Michigan with seven insurance companies in 2018 offering products on Healthcare.gov, down from 16 companies in 2014. But that is still fairly robust competition.
Nationwide, some states are down to just one or two insurers in their individual market. Insurance companies including UnitedHealthcare and Humana have opted to completely discontinue such coverage because of financial losses from individual plans.
“It’s really remarkable that we have as many market plans as we do” in Michigan, said Marianne Udow-Phillips, executive director of Ann Arbor-based think tank Healthcare Research & Transformation.
However, she thinks Michigan could see more insurers leave the individual market if federal subsidies are pulled or enrollment declines.
“We could certainly see others (exit) down the road until we get more clarity from Washington,” Udow-Phillips said.
HAP said its exit from the marketplace will affect about 9,100 customers, representing 1.4% of its total membership. The health insurer will continue to offer individual plans that aren’t on the Healthcare.gov marketplace exchange, but these plans aren’t eligible for the Obama-era law’s affordability subsidies and will likely be too pricey for many middle-income individuals.
The HAP pullout coincides with a looming surge in premium prices for individual plans across Michigan and throughout the country.
Statewide, health insurers are seeking to raise premiums next year by an average 27.6%, a figure that assumes the Trump administration will discontinue so-called cost-sharing payments aimed at helping lower-income people with medical costs.
President Donald Trump has indicated he does not support these payments. The federal government is currently making them on a month-to-month basis.
State officials say they haven’t calculated what the average increase will be if those payments keep going, but the typical 2018 rate hike would still be double-digit percentage points.
HAP had sought from state regulators an average 24% price hike in 2018 before Friday’s announcement that it will pull out of the individual marketplace. That increase was to be limited to 16% if the cost-sharing payments continued.
These higher premiums will indirectly affect taxpayers because the health care law’s government subsidies will expand to cover the new, higher rates.
Reasons for the surging premiums include a sicker population among those in the individual market, skyrocketing prescription drug prices, people who drop insurance coverage after getting pricey procedures as well as young people who forgo insurance.
A recent Congressional Budget Office report blames the spike in premiums on “short-term market uncertainty,” particularly the uncertainty surrounding certain subsidies and how more geographic areas have just one insurer in the marketplace.
About 300,000 Michiganders are expected to buy individual coverage for 2018. The next open enrollment period will begin Nov. 1 and end Dec. 15, half the length of last year’s sign-up period.
Federal data indicates that just over 320,000 Michiganders signed up for coverage under the Affordable Care Act for 2017.
However, next year’s Michigan enrollment could be below projections as a result of the Trump’s administration’s recent decision to slash funding for two organizations in the state that help residents sign up for plans through assistants called Navigators.
Officials with the Centers for Medicare and Medicaid Services, who oversee the program, have defended the funding cuts, saying the Navigators actually assist a very small percentage of Affordable Care Act enrollees.
The Trump administration has also said it will cut advertising to encourage sign-ups from $100 million to $10 million.
The penalty for not signing up and buying health insurance is $695 for an individual or 2.5% of income, whichever is higher. This year the IRS did collect penalties from people who chose to forgo health insurance.
Following the collapse this summer of a Republican effort to overhaul the health care law, Trump said he wanted to see the Affordable Care Act “fail” so that Democrats would start cooperating with Republicans on a replacement.
“We’ll let Obamacare fail and then the Democrats are going to come to us,” Trump said in July.
HAP is a subsidiary of the Henry Ford Health System.
Announcing the insurer’s decision to leave the Obamacare market, HAP President and CEO Terri Kline said in a statement that “market volatility and uncertainties have made it difficult for insurers to effectively plan for and provide affordable individual health plans.”
“We will continue to advocate for stability and affordability of coverage for consumers. HAP is prepared to re-enter the Health Insurance Marketplace in the future — if and when the individual market stabilizes,” Kline said.
U.S. Rep. Sander Levin, D-Royal Oak, faulted the Trump administration for causing the circumstances that prompted HAP to exit Healthcare.gov.
“It is now up to Congress to end this uncertainty and strengthen the individual health insurance market,” Levin said.
Contact JC Reindl: 313-222-6631 or firstname.lastname@example.org. Follow him on Twitter @JCReindl. Staff writer Todd Spangler contributed to this report.
Health insurers in Michigan are seeking the following average rate increases for 2018 individual plans sold on and off Healthcare.gov. These rates assume the discontinuation of federal cost-sharing payments. Final rates could be lower following regulatory review:
- Blue Care Network: 22.6% — 116,476 anticipated covered individuals.
- Blue Cross Blue Shield: 31.7% — 59,703 individuals.
- McLaren Health Plan Community: 26.6% — 2,999 individuals.
- Meridian Health Plan: 59.4% — 6,319 individuals.
- Molina Healthcare: 42.8% — 26,270 individuals.
- Physicians Health Plan: 25.6% — 6,548 individuals.
- Priority Health: 19% — 35,849 individuals.
- Total Health Care USA: 27.6% — 8,591 individuals.
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