Michigan health insurers seek double-digit rate hikes for 2025

Inflation may be slowing down at the grocery store and used car lot, but it is poised for a giant leap next year in the cost of health care.

A report from the Michigan Department of Insurance and Financial Services shows that health insurance plans covering nearly 900,000 Michiganders are seeking double-digit rate increases for 2025.

The proposed increases would average 11.2% for small group policies — those for businesses and organizations with fewer than 51 employees — and 10.7% for individual policies, including those sold on the Healthcare.gov website.

The rate requests are the highest in years in Michigan. Last year, state regulators approved increases that average 7% for small groups plans and 5.3% for individual market plans.

The public comment period on the rate proposals ended late last month, although DIFS isn't expected to finalize the 2025 rates until October. A DIFS spokeswoman on Friday declined comment while the rates remain under review.

Many who buy individual plans on the Healthcare.gov marketplace will be shielded from the full impact of the proposed rate hike by the Affordable Care Act's generous tax credit subsidies, which are based on income and grow with the price of insurance.

Additional Healthcare.gov subsidies for middle-income earners began in 2021 and are scheduled to run through 2025, at a projected cost to the federal government of about $22 billion annually.

The state's largest insurer, Blue Cross Blue Shield of Michigan, is seeking rate increases of more than 11% for its small group plans that cover over 276,200 people, and average increases of just under 9% for its individual market HMO plans and 7.5% for its individual PPO plans.

In a statement Friday, Blue Cross attributed its need for higher rates to bigger claims across all medical service categories — inpatient, outpatient and office visits — and higher-than-average pharmacy cost trends.

Blue Cross also said it has managed to keep total average increases for its small group employer plans to about 5% over the past four years.

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"We remain vigilant on the pressure that both medical and pharmacy costs are having on small employer premiums," the statement said.

Priority Health is seeking an average 13.2% rate increase for its small group plans that currently enroll more than 91,000 people, and an average 18.9% increase for its individual market plans covering nearly 155,000.

The Grand Rapids-based insurer said in a statement Friday that the rate increases are needed because of the rising costs of prescription drugs, especially GLP-1 drugs for diabetes and obesity such as Ozempic, as well as higher utilization of medical services.

The Priority Health statement also stated that four out of five people in the individual market qualify for a Priority Health plan that costs only $10 or less a month after the federal tax credits.

"We work extremely hard to maintain affordable rates that provide access to high-quality care for our members," the Priority Health statement said. "Nearly 90 cents of every dollar is spent on member care."

Many insurers including Blue Cross and Priority, citing high costs, have begun or will soon begin restricting coverage for GLP-1 drugs to generally just patients who have diabetes, and no longer covering them for patients who primarily want the injectable drugs for weight loss.

Without insurance, GLP-1 drugs can cost around $1,000 per month out of pocket.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on X @jcreindl.