Small businesses across Michigan will pay an average of 7.1 percent more for employee health insurance in 2024 under rate proposals approved by state regulators.
The statewide average increase applies to 12 insurance companies that participate in Michigan's small group insurance market for employers with 50 or fewer employees.
The rate increases, approved by the Michigan Department of Insurance and Financial Services, range from a minimum of 4.5 percent at Paramount Insurance Co. which has about 100 participants in group policies for small businesses, to a maximum of 12.1 percent at Alliance Health and Life Insurance Co. a subsidiary of Detroit-based Health Alliance Plan, which sells PPO policies and has about 20,000 participants.
Blue Cross Blue Shield of Michigan, the state's small group market leader with 170,000 customers, has received approval for a 6.7% rate increase. Regulators approved a 5.8% rate increase for HMO subsidiary Blue Care Network, which has more than 111,000 customers.
Priority Health's small-group rates, based in Grand Rapids, will increase an average of 6.7% for HMO and point-of-service plans. Rates for PPO plans sold by Priority Health Insurance Co. will increase an average of 6.3 percent.
Blue Cross Blue Shield and Priority Heath control the majority of West Michigan's small employer health insurance market.
When the companies presented rate plans to the state in May, representatives from both insurers pointed to a trend of rising claims, especially for prescription drugs, which has resulted in higher premiums. They specifically cited the rising cost of expensive specialty drugs as the reason for their rate proposals.
Blue Cross Blue Shield reported a 12 percent increase in pharmaceutical claims in 2022 and a 20 percent increase in early 2023, "which is certainly higher than what we've seen in the past," Sandy Feaster, Blue Cross Blue Shield's vice president of business operations in Michigan, told Crain's Grand Rapids Business at the time.
"There's always volatility in (claims) trends, but this year it's more specific to pharmacy," Feaster said in a previous report. "It's something we're going to continue to see. It's by no means something that is one and done. They're definitely contributing to the upward trend, these new and emerging therapies that are expensive."
State regulators have approved small-group rate plans largely as insurers proposed them back in the spring. The only exception was Health Alliance Plan, where a proposed 12.8 percent increase was reduced to the approved 11.1 percent, according to a summary of rate proposals that the Department of Insurance and Financial Services posted online this week.
The Department of Insurance and Financial Services also approved rates for 2024 for individual health policies, which will average 5.5% higher than this year's rates. Including Priority Health individual plans will increase by an average of 5.2%.
Regulators approved an average increase of 4 percent for Blue Cross Blue Shield individual plans and 5.4 percent for Blue Care Network.