As the individual market matures, Blue Cross remains committed for the long haul

As the individual market matures, Blue Cross remains committed for the long haul

One of the hallmarks of our company’s first 77 years has been our commitment to make coverage available for all. Today, as the Affordable Care Act matures, and the individual health insurance market grows through an awkward-stage adolescence, our commitment to coverage for people everywhere in Michigan needs to be the strongest it’s ever been. And it is.

Unlike some insurers who are bailing out on the post-ACA individual market, Blue Cross Blue Shield of Michigan remains committed to staying in. That’s the best way we can serve you. To accomplish this goal, however, we must price our health plans responsibly.

Health insurance premiums must reflect the cost of care. Some insurance carriers underpriced the ACA market when it opened in 2013.  No good business can spend more money than it takes in, and unfortunately some of these insurers went belly up. This left their members in the lurch, looking for coverage elsewhere.

So as Blue Cross moves forward with rate increases for our nearly 250,000 members who buy their coverage in the Affordable Care Act marketplace, we do so with a deliberate objective of balancing affordability with profitability. In 2015, Blue Cross Blue Shield of Michigan experienced our first profitable year ever in the individual market – with a small positive margin of 3.8 percent, when the law allows for margins up to 20 percent. Unfortunately, we project a loss for 2016.

A positive margin (or a small loss) is important to our business, as the individual membership accounts for just five percent of our total. As a mutual company that is mission-focused on serving all of our members collectively, we need sustainable margins across each of our segments of business – so 95 percent of our membership doesn’t end up subsidizing the other five percent.

While about half of the nation’s insurers have proposed individual rate increases above 20 percent, our statewide average increases are below that mark. This fact won’t matter much to the insured member who is struggling to make ends meet. We understand that. So we try to balance our need to run a good insurance business with the member’s need to find a plan their budget can afford. We offer a variety of plans at multiple price points to give people choice. We’ll offer 38 plan options this year. In a volatile retail market, Blue Cross seeks to balance pricing and product choice, so people have options.

Our pricing in the individual market is affected by the same forces seen elsewhere in the country.  We continue to see people dropping coverage after signing up, younger people staying uninsured by choice, and specialty drug costs weighing on premiums.  Unlike other parts of the country, we have robust competition here in Michigan, with 12 insurers participating. This is good for consumers.

What we seek is to serve our members with quality coverage, work with them to select from many options the health plan that works best for them, and promote a market that is sustainable. Our objective is what it’s always been – to be there to cover people, everywhere in Michigan, for the long haul.

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