State regulators have approved significant health insurance rate increases for 2022 that are said to reflect recent pent-up demand for medical procedures and services that people put off because of earlier COVID-19 surges.
The increases OK’d by the Michigan Department of Insurance and Financial Services take effect Jan. 1 and will average 7.1% for small group plans — businesses and organization with 50 or fewer employees — and 4.7% for individual market insurance policies purchased through the Healthcare.gov website. The new rates will impact roughly 742,000 people.
The rate hikes are much bigger than what regulators approved last year because insurers saw fewer claims during the pandemic as people delayed elective procedures and made fewer visits to the doctor. Those previous increases, 1.4% for small groups and 1.1% for individual policies, were unusually low by historical standards.
Mike Embry, president of Southfield-based insurance agency Comprehensive Benefits, said his small group clients with PPO plans are generally seeing 6% to 7% increases for 2022 and those with HMO plans are going up 8% to 11%.
“Last year, because of COVID, the rates were relatively flat,” Embry said. “I think a lot of people were putting off going to the doctor, putting off having procedures done.”
A bit of good news is that rates for many dental and vision plans are staying flat or even going down next year, Embry said. He attributes that circumstance to people putting off returning to the dentist or optometrist for longer than they did the doctor.
“On the dental and vision side, we’ve actually seen rate reductions for two years,” he said.
Blue Cross Blue Shield of Michigan, the biggest player in the employer-sponsored insurance market, is raising rates 7.9% in 2022 for its small group plans and 6.9% for its Blue Care Network small group plans.
A Blue Cross representative previously noted that between 2015 and 2021, its small group rates experienced modest 1.2% average yearly increases.
The open enrollment period for individual policies on the Healthcare.gov website begins Nov. 1 and runs through Jan. 15, although people must enroll by Dec. 15 for coverage to start Jan. 1. Michiganders can chose individual plans from 10 different insurance companies. Although Total Health Care USA is dropping out of individual coverage, UnitedHealthcare and US Health and Life are starting coverage.
Rate increases on individual policies will not directly impact everyone who shops for a plan on Healthcare.gov because the Affordable Care Act subsidies for income-eligible individuals also increase as sticker prices on policies increase.
President Joe Biden’s COVID-19 rescue plan, signed into law in March, temporarily expanded eligibility for those subsidies to higher-income people for 2021 and 2022, and also lowered premiums for those already eligible.
A survey by the Kaiser Family Foundation found that Michigan this year has the third cheapest “benchmark plan” premiums for individual policies, an average of $347 per month for the second-lowest cost silver plan for a 40-year-old. The average for the U.S. was $452.