The Resilience Of The Affordable Care Act: The Michigan Example

Shortly after the passage of the Affordable Care Act (ACA), Rick Snyder became the governor of Michigan. From the beginning of his administration in 2011, he set the tone for Michigan’s approach to the ACA. That initial approach continues to play out today and has been a key factor in the relative success and resilience of the ACA in Michigan, despite the recent turmoil that has challenged the individual market across the country.

In 2014, when the ACA coverage expansion went into effect, 13 issuers offered 73 health plans in Michigan. Michigan’s robust exchange is due in part to the Snyder administration’s decision to retain plan management responsibilities within the state’s federally facilitated exchange. The Michigan Department of Insurance and Financial Services works closely with issuers as they review annual rate filings to ensure access to plans for residents across the state. A few issuers have exited the market in subsequent years, but for the most part, those leaving the market were health plans that were either new start-ups or had limited experience with the individual market. Even with these departures, every area in Michigan had a choice of health products, and most consumers had more than one health plan to choose from as well.

The health insurance turmoil of 2017 did affect the Michigan market. Michigan health plans raised their premiums an average of 26.7 percent for the 2018 plan year. Approximately 15 percent of that increase was due to the nonpayment of cost-sharing reductions by the federal government, and 5 percent was due to uncertainty about the regulatory climate. Since that time, health plans have reported solid overall earnings and appear to have stabilized in the individual market, and a new entrant (Oscar) is coming into the market in 2019.

While many analysts have expected large premium increases in 2019 from the elimination of the ACA’s tax penalty, Michigan health plans’ initial rate filings are proposing only an average increase of 1.4 percent in premiums in 2019. The low proposed premium increases are resulting from a combination of the high increases that occurred in 2018, a better understanding of the population enrolling in the ACA Marketplace, and less concern by the health plans than the Congressional Budget Office has that individuals will drop coverage because of the repeal of the tax penalty.


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