Three health insurance companies have all but completely dropped out of Michigan’s individual marketplace that’s part of the Affordable Care Act.
Health Alliance Plan and Molina Healthcare will no longer offer ACA plans in the state, and Meridian Health Plan is sharply shrinking the geographic areas where it offers ACA plans.
The announcements leave about 200,000 people scrambling to find another plan. Many of the remaining plans have large rate hikes of 20% or higher compared to last year.
Dr. Mark Fendrick is director of the University of Michigan Center for Value-Based Insurance Design, which researches ways to reduce people’s financial barriers to getting health care.
He said he’s worried that the higher costs for remaining ACA plans may force more people to go without insurance, or end up underinsured, if they choose the cheapest plans under the ACA, commonly known as Obamacare. Those include so-called catastrophic and “Bronze” coverage plans that usually have very high deductibles and co-pays.
“The amount of money that you have to spend out-of- pocket to see a physician, fill a prescription, or get a procedure done, is often so high that it precludes you from getting the care you need,” he said.
Fendrick said there’s a risk that more people who have no or inadequate insurance will use emergency departments for their health care, and bankruptcies due to medical bills could rise.
He said the unresolved issue of federal subsidies for ACA plans is a primary reason for this year’s dramatic increases in rates.
The federal government is currently in an extended shutdown, due to a fight between Democratic and Republican legislators over the pending lapse of ACA subsidies.
“If Congress cannot agree on some extension of the enhanced tax credits, I think a larger group of individuals will drop their coverage at the end of 2025,” said Alan Baumgarten, an analyst who issues health market reviews in seven states, including Michigan. “And if state regulators allow it, I think the remaining insurers will seek to refile their rates and get even larger increases.”
Baumgarten said that’s because people who have many health issues, and use medical care more than others, are most likely to switch to another plan, despite the higher rates. But younger and healthier people may decide to go without insurance. That would increase overall costs for the health care plans that remain in the ACA.
“I think they would be concerned that their plans would see an influx of above average utilizers applying for coverage with them,” he said.