Getting “Under the Hood” on Individual Health Insurance Rates


| 4 min read

The last time you went to the grocery store and noticed that the price of strawberries was significantly higher than last month, you likely didn’t consider drought in California to be a factor. Maybe you simply bought bananas instead. And when you last shopped for a car, it’s likely that you didn’t consider each of the costs that add up to that vehicle’s sticker price – things like raw materials, energy costs and the labor costs in the country where it was built. You probably just shopped around for the best deal on the right car for you. Under the Affordable Care Act law, health insurance has become a consumer product – just like anything you buy at retail. When people shop for fresh produce or a vehicle to get them to the grocery store, they are being impacted by costs that go unseen in the product they buy. These underlying costs are real drivers of the retail price people pay – and health insurance is no different. We at Blue Cross want you to be able to understand what’s under the hood when it comes to health insurance. Particularly since we just filed rates for our individual health plans that are, on average, 10 percent higher than last year. What are the factors driving these increases?

Seeing rates change, you might be wondering: what’s driving the change?

  • Use of care. If you have individual health insurance coverage, you are part of a larger pool of people who own coverage like yours. Because the health reform law expanded insurance access for millions of Americans who didn’t have it before, many newly insured individuals are taking advantage by going to the doctor and hospital to treat health concerns that have been lingering for a long time. This drives up cost because health services are being used more commonly, and insurers are paying for services at greater volumes than before.
  • Experience. Our first two years of offering ACA-compliant plans were a little like a guessing game. Our actuaries (math wizards who are very smart predictors of how people use health care and how much it costs) anticipated certain costs which factored into pricing. Now, we have two years of data and experience on those costs. Our rates now reflect actual cost, based on medical claims paid for all covered individuals.
  • Prescription drugs. Drugs play a critical role in helping to prevent, manage and cure disease. Yet a key factor that can push up premiums is the price of new specialty drugs that are being created to treat serious diseases.
  • Changes in the law. In 2016, the rules around out-of-pocket maximums change to make sure that one person on a family plan cannot be solely accountable for reaching the out-of-pocket maximum on that coverage. This change drives rates up because health plans will be paying more. Additionally, the federal government is beginning to wind down its reimbursement program set up to help insurers offset super-high medical costs associated with some individuals with very expensive conditions. This adds to the overall cost of insurance.

What is Blue Cross Blue Shield of Michigan doing to help?

  • Plan options. There is no one-size-fits-all plan, and we continue to offer a multitude of plans with a range of benefit options and costs. Individuals can choose the right plan for themselves and their family from 45 coverage options Blue Cross plans to offer in 2016, pending regulatory approval.
  • Resources for people. Among our many member service tools, we have real people – our Health Plan Advisors – available to help people understand these changes and their health plan choices.
  • Online convenience. People can go to to learn about the differences in plans and rates in simple language to help them make informed choices when selecting a plan.
  • Free Helpline. Customers can call our toll-free line to talk with a Health Plan Advisor who will help them find the most cost-effective plan for their situation.
Our goal is to make sure people in Michigan have access to affordable, quality health insurance. And we are proud that despite our proposed increases, Blue Cross coverage will remain among the most affordable in the individual market, available everywhere in Michigan. Photo Credit: dave_7
MI Blues Perspectives is sponsored by Blue Cross Blue Shield of Michigan, a nonprofit, independent licensee of the Blue Cross Blue Shield Association