Marianne Udow-Phillips is Executive Director for the Center for Health Research and Transformation in Ann Arbor; Megan Foster Friedman is a senior analyst for the Center for Health Research and Transformation in Ann Arbor; Maggi Randolph is a senior analyst for the Center for Health Research and Transformation in Ann Arbor
The Affordable Care Act (ACA) is alive and well in Michigan. Despite the well-publicized turmoil in the market, Michigan citizens who buy their coverage in the individual market will have more choices of insurance carriers in 2019 than they did in 2018, and the cost of coverage is proposed to increase modestly -- and in some cases is going down.
Michigan has always approached the individual market elements of the ACA in a pragmatic and non-ideological way. The State, health plans, providers, businesses and consumer groups have done their best to make the ACA work on behalf of consumers, and it shows. In 2019, premiums are proposed to increase an average of only 1.4%, a new market entrant is coming to Michigan (Oscar), and health plans have been financially stable. Other states could learn much from Michigan if their goal is to help citizens get access to health care, and if they want to use the ACA as it was intended.
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Since January 20, 2017, the future of the ACA has been in doubt. There have been numerous attempts to repeal the ACA; the tax penalty for not having insurance coverage has been ended; the Department of Health and Human Services stopped paying health plans for the cost-sharing reductions the plans are required to make for individuals with incomes below 250% of poverty; support for navigators to help individuals enroll in the ACA has all but ended; risk-adjustment payments have been put in doubt; and, short term health plans that are non-compliant with the ACA rules and were permitted under the Obama administration to last no longer than 3 months have now been proposed to be extended to 3 years. All of these changes have created turmoil in the market, and have been seen as attempts to weaken the ACA. Despite these real challenges, the ACA Marketplace has been remarkably resilient and Michigan’s experience with the Marketplace has been particularly robust.
From day one, the ACA in Michigan operated as it was envisioned by the framers: a vibrant market that provided consumers with options, covered a breadth of services, and enabled consumers to make informed choices about tradeoffs between premiums, cost-sharing levels, and networks of hospitals and doctors. In 2014, 13 issuers offered 73 health plans in Michigan. Every region in the state had a choice of health products and most regions had a choice of carriers.
The health insurance turmoil of 2017 did affect the Michigan market. Michigan health plans raised their individual market premiums an average of 26.7% for the 2018 plan year. Approximately 15% of that increase was due to the non-payment of cost-sharing reductions by the federal government, and 5% was due to uncertainty about the regulatory climate.
But, even with these changes, the ACA has remained strong in Michigan. The ACA’s design, combined with unique market factors in the state, has been essential to its relative success.
The ACA expanded coverage through a combination of carrots and sticks. The individual mandate was meant to encourage people to get coverage by applying a tax penalty to individuals who did not have coverage and were not eligible for an exemption. In 2015, there were 189,160 Michigan residents who paid that tax penalty, the most recent year of data available. The tax penalty was ended by Congress as part of the tax changes that will go into effect in 2019. Many analysts were concerned that the end of the tax penalty would mean that 2019 premiums would increase dramatically. But, the reality is that the tax penalty was never as stringent as the health plans wanted and the carrots included in the ACA were probably a more important reason people were getting coverage.
The ACA’s tax credits have made insurance affordable for many who could not afford it previously. In Michigan, 86% of those who got coverage in the Marketplace in 2018 got it with a tax credit. Those with tax credits were sheltered from the 27.6% increase in premiums; those without tax credits had to pay that full increase to maintain coverage. As a result, many who did not get a tax credit did not get coverage in 2018. National data tells us that individual market membership dropped from 16.4 million in the first quarter of 2017 to 14.4 million in the first quarter of 2018. While the number of individuals buying coverage on the Marketplace who received tax credits actually increased by over 500,000, the decrease was driven by a drop in enrollment among those that did not receive tax credits - 209,000 unsubsidized Marketplace consumers, and 2.3 million who purchased insurance directly from insurers, off the Marketplace.
Michigan’s local environment has also been important to the success of the ACA’s Marketplace. The health plans in Michigan with the largest share of the individual market have deep Michigan roots. Blue Care Network, Priority Health, and Blue Cross Blue Shield of Michigan combined cover 84% of the members in the individual market in 2018. Total Health and Physician’s Health Plan are the next largest insurers. None of the big, national commercial health plans offered coverage in the 2018 individual Michigan Marketplace.
Prior to the ACA, BCBSM had a long history providing coverage in the individual market as the insurer of last resort. And, the other health plans offering coverage in the individual Marketplace had substantial experience with Michigan’s Medicaid program, successfully serving a complex population under risk-based contracts with the state. Many of the plans in Michigan’s Marketplace understood the market and all were committed to the state and their local communities.
Importantly, Governor Snyder and his leadership never made the ACA a political issue in Michigan. Rather, the Governor approached the ACA from a pragmatic perspective – trying to make the market work for Michigan citizens. As a result, the Department of Health and Human Services and the Department of Insurance and Financial Services partnered with health plans, consumer groups, providers and others to make the Marketplace work as best as it could.
Michigan’s Marketplace enrollment dropped in 2018 but not by nearly as much as many predicted. In 2018, nearly 294,000 selected coverage through the Marketplace in Michigan, 9% less than in 2017. And at this point in time it appears that in 2019 Michigan citizens will have good choices of coverage with minimal premium increases when they shop for coverage this fall.
In today’s often hyper-partisan and politicized environment, it is important to note that there are good examples of government working for the people of our state. The ACA Marketplace is one such example of how policymakers rose above turmoil and chaos and came together to preserve relative affordability and access to health coverage. The ACA is indeed alive and serving the people of Michigan.