Statewide Blue Cross insurance rate hikes on individual policies squeeze local workers
Some small startup businesses and independent contractors face pending insurance hikes of over 40 percent in the wake of Blue Cross Blue Shield of Michigan’s decision to raise premiums on its individual insurance plans.
The Detroit-based nonprofit recently sent out letters to affected customers outlining the increases, which average 22 percent effective Oct. 1. Blue Cross has said the rate hikes were unavoidable after losing $133 million last year on individual subscribers and lobbying unsuccessfully for legislative remedies in Lansing.
The rising premiums primarily are hitting workers who lack employer-provided insurance coverage. But they’re leaving some workers, whose pre-existing conditions bar them from obtaining coverage through a private, for-profit insurer, with few alternatives.
“There are short-term policies out there that are available for people, but they have very high deductibles,” said Jennifer Coleman, member benefits director for the Ann Arbor Area Chamber of Commerce.
The issue is reflective of broader problems that are adding fuel to the debate over national health care reform.
Because it is considered an insurer of last resort, the Blues are required to accept all individuals regardless of their health status or any pre-existing conditions. The nonprofit insurer has said that private insurers cherry-pick the healthiest and lowest-cost customers for enrollment, leaving the remaining high-cost customers to the Blues.
"Even with the rate increase, Blue Cross will continue to lose money on its individual products because costs will exceed premiums collected for these individuals," the insurer said in a release. "Our recent rate increases in the individual market underscore the urgent need for health insurance reform in Michigan and the nation.”
Approximately 163,000 purchase non-group or group conversion plans from the Blues.
Pat Anderson, a Realtor with Keller Williams Realty in Ann Arbor, likens the increases to the Blues throwing a “temper tantrum” for not getting its way with individual-market reforms in the Legislature. She received a letter last weekend from Blue Cross outlining plans to increase her premium by 40.52 percent.
That’s on top of a 20 percent rate increase in May, Anderson said, driving her monthly bill for health insurance to roughly $343 - higher than her car payment. She says she still hasn’t gotten an answer as to why her monthly bills keep changing and how her rates were calculated.
“I have yet to get a phone call back,” Anderson said. “They ignore your request. They send bigger bills without any explanation.”
But Carol Grubb, an associate broker and Realtor with Keller Williams, said she understands the insurer’s rationale for pushing through the increases.
“They have to insure everybody,” Grubb said. “I think what’s happened is they’re getting a lot of people that aren’t insurable elsewhere, so the premiums are higher. Do I like it? No.”
Grubb said her rates are set to rise 11.31 percent on Oct. 1, adding to a roughly 10 percent raise passed on in May.
Realtors are often considered independent contractors who work on commission, and therefore aren’t offered coverage by their employers.
Grubb said she’ll likely ask Blue Cross to raise the deductible on the plan that covers herself, her husband and their son. She’s also begun making phone calls to seek out alternate insurance policies, but said one family member’s pre-existing condition would likely complicate things.
“I can’t afford this,” Grubb said. “My rate is now over $17,000 a year. That’s before deductible, that’s before copay. Let me assure you, that’s not a bells-and-whistles plan.”
Anderson also plans to seek out alternate coverage.
“I’m a single person,” she said. “I don’t have alternate sources of income. We all know the realities of the real estate market. I’m not making money hand over fist.”
Coleman said she’s heard from a few people who contacted her in the hopes of joining the chamber and getting a discount through its group coverage program. But the chamber is unable to offer any discounts to members who buy individual policies.
The callers can qualify for the chamber’s group coverage if they have two or more subscribers, Coleman said. Another option would be to purchase catastrophic coverage, but those policies typically pair with high deductibles as well.
But Coleman acknowledges the rate increases leave many subscribers with few options.
“I think it’s going to be an issue,” she said.