Michigan approves steep health insurance premiums hikes for 2016

Consumers in the state of Michigan tend to face high insurance costs in their everyday lives because the cost of auto coverage there typically exceeds the national average by a few thousand dollars per year. However, the state government recently approved proposed rate hikes for health insurance as well, meaning consumers will have to juggle even more insurance costs for 2016.

The average Michigan resident will now pay 6.5 percent more for their coverage bought on the individual health insurance marketplaces mandated by the Patient Protection and Affordable Care Act than they did last year, following a lengthy review of insurer proposals by the Michigan Department of Insurance and Financial Services, which approved the rate hikes earlier this week, according to a report from the Detroit Free Press. In all, that will typically affect about 560,000 people statewide.

Despite the fact that this is a relatively small increase, consumer advocates in the state are nonetheless concerned about the impact on lower-income residents, the report said. The state's regulatory body, though, tends to be fairly lax in how closely it regulates proposed rate hikes in general. Further, Patrick McPharlin, the insurance department's director, noted that this increase is still below the national average.

What about private insurers?
On the other hand, depending upon the insurer through which they get their coverage, another 310,000 or so residents could see their rates rise somewhere between 9.7 percent or 11.4 percent on average, the former of which is actually down slightly from the 9.7 percent approved rate hikes seen last year, the report said. Rick Notter, the director of individual business at one such major insurer, told the newspaper that a lot of that comes from the added risk of covering more people who did not have access to health insurance before, calling it “pent-up demand” from consumers.

More Michiganders are getting health insurance these days, and those people may be driving up costs somewhat.

As for group markets?
However, those who get their insurance through small group coverage via their employers, for companies with fewer than 51 employees, will only see their rates rise about 1 percent on average, the report said. That change will impact more than 345,000 Michigan residents. Most of those getting group coverage through major private insurers will see rates rise somewhere in the 1.6 percent or 1.7 percent range.

Meanwhile, some others will see a decline of roughly 3.6 percent, the report said. The company behind those proposed decreases cited a “good situation” related to current and past claims, as well as projections related to future costs that could remain relatively low.

All of this will be important for insurers to monitor going forward, because the ways in which they interact with individual consumers and small groups can do a lot to inform their future decisions about how best to roll out coverage options in the future. More people are coming to health insurance than ever these days, and helping them to find the plans that work best for them both in terms of coverage and cost may be beneficial to all parties.