PricewaterhouseCoopers found in an analysis that the Michigan Department of Insurance and Financial Services proposed an increase in the premium rate of 4.6%. Humana Medical Plan of Michigan proposed a 17.6% increase and at the same time Molina Healthcare of Michigan wanted a 21.6% decrease.
The large difference in premiums adjustments for 2015 starts because there is no underwriting experience for individual policies which are sold on the Health Insurance Marketplace under Obamacare.
"You did not have a predictable block of business," said John Dunn, vice president of small- and mid-group business at Blue Cross Blue Shield of Michigan.
All the policies were new for 2014 and had to meet the benefit and cost mandates of the ACA, insurers had virtually no underwriting history to use to set first-year premiums, said Jon Snead, senior vice president of the health and benefits practice at the Grand Rapids office of benefits consultant Aon.
Insurance carriers also were uncertain on exactly what kind of risk pool to expect with the ACA plans for individuals, a number of whom were previously uninsured and qualified for a federal subsidy to buy coverage.
Snead felt that the huge difference seen this year in annual premium adjustments would decrease as underwriting history and enrollment patterns were set. "My expectations for this year would be that maybe everybody would start to merge toward the median. You had so many outliers in the first round," Snead said. "Last year, the carriers had no idea."
Blue Cross Blue Shield of Michigan filed for a 9.7 percent increase in the premium for individual policies, and its HMO subsidiary, Blue Care Network, proposed a 9.3 percent increase. Blue Cross Blue Shield is set to double the number of individual policies available on the Health Insurance Marketplace to 41 for next year.
Under the ACA, small employers with 25 or fewer employees who meet federal wage guidelines can get a temporary tax credit for up to 50 percent of their contribution to health coverage for two years. Now employers will have to decide whether to pay for health benefits given to employees, drop them and pay penalty while letting them buy their own covers in the health exchange.
Mark Sanchez, July 2014
Hannah Punitha (IRDA Licence Number: 2710062)