Obamacare booms in Michigan, but wide differences in policy rates raise new questions

Residents of Michigan counties with few insurers are paying higher premiums for health-care plans offered through the Affordable Care Act. The most costly plans are in the Upper Peninsula, where options are limited. Residents of the Grand Rapids area enjoy the best rates.

A few months into a critical phase of its rollout, the Affordable Care Act is on track to meet or exceed forecasts on two fronts in Michigan, enrolling residents in the individual marketplace, and expanding Medicaid. If experts are right, it could cut the uninsured in Michigan in half by 2019.

But on a third front – the insurance market competition – it might need a checkup.

The final piece of health care reform – employer-mandated insurance – won't begin until 2015.

Competition among insurers was to be a key force to keep rates down. It seems to have worked in many urban counties, but in  more than two dozen other Michigan counties there are three  insurers or fewer competing in the individual marketplace.

Delta County in the Upper Peninsula has just one. Ten other UP counties have only two.

Rates in these rural counties are among the highest in the state, according to analysis by the Ann Arbor-based Center for Healthcare Research & Transformation (CHRT), a nonprofit partnership between the University of Michigan and Blue Cross Blue Shield of Michigan.

The least expensive basic plan for a 40-year-old couple with two children costs $761 in Delta County, compared with $462 a month for a comparable plan in Kent County, $560 in Washtenaw County and $566 in Ingham County. While Delta County offered just five insurance plans with one insurer, Kent County had four insurers and 33 plans, Ingham County five insurers and 39 plans and Washtenaw County five insurers and 40 plans.

“I think it's natural to look at the number of insurers that are operating in a county and expect that competition is causing some of these low prices,” said Joshua Fangmeier, a CHRT health policy analyst.

Fangmeier said insurers in many rural counties like Delta don't offer health maintenance organization plans – with more limited health provider options – that typically offer the cheapest premium. It is also true that residents of rural counties had higher premium rates before the Affordable Care Act was implemented, in part because these counties lack large health care provider networks that can provide economy of scale for service.

But overall, given its stumbling start, Fangmeier noted that marketplace enrollment fared much better than many expected.

Before enrollment in the individual market opened Oct. 1, experts forecast up to 190,000 residents would sign up by the close of enrollment on March 31. The actual total: 272,539.

It was projected another 320,000 people would enroll in 2014 in Healthy Michigan Plan, expansion of Medicaid for low-income residents making up to 138 percent of the federal poverty level, about $16,000 for an individual. As of May 27, nearly 270,000 signed up since enrollment commenced April 1. Officials believe it will meet or exceed projections (see accompanying story) and approach 500,000 within a few years.

CHRT projected  enrollment of 127,000 in the individual marketplace by March 31, while federal calculations put it at 161,000 and the Urban Institute projected 189,000.

Those numbers seemed hopelessly optimistic in the early weeks, when the federal website for enrollment was plagued by error messages and frequent crashes. Just over 1,300 signed up for a plan in Michigan in the first month. Five months later, a late surge pushed enrollment past 270,000.

National enrollment topped 8 million, a million more than projected. The Rand Corporation estimated that one third of those who signed up for insurance under the marketplace were previously uninsured.

“We do tend to underestimate how much people value health insurance,” Fangmeier said.

Nearly 90 percent of those who enrolled in Michigan's individual marketplace received tax credits to do so, according to federal figures.

The Affordable Care Act offers tax credits for premiums for those making up to 400 percent of the federal poverty level, or about $46,000 for an individual and $94,000 for a family of four. Subsidies are highest on the low end of the income scale and phase out near the top.

Marketplace plans offer coverage options ranging from basic to comprehensive, called Bronze, Silver, Gold and Platinum. Plans must offer coverage that includes emergency services, hospitalization, prescription drugs, maternity care and birth control, mental health and substance abuse treatment and others.

In one example cited by the Congressional Research Service, an individual with an income of $17,235 would have a monthly premium of $201 for a low-cost Silver Plan, of which $143 would be paid by tax credit.

In 2013, CHRT projected that health care reform would more than cut the number of uninsured in Michigan in half, from 1.1 million in 2011 – before implementation of the Affordable Care Act – to just over 500,000 by 2019.

Based on marketplace and Medicaid expansion numbers, another analyst believes that number may be too conservative.

“It may be even lower than that in 2019,” said Leah Hatch-Vallier, health policy analyst for CHRT.

Unhealthy competition

Residents of rural Michigan are stuck with higher premiums - and fewer insurers - under the Affordable Care Act. The costliest plans are in the Upper Peninsula, while the Grand Rapids area has the best rates.

Controversies persist

Hatch-Vallier said it can be expected some individuals not eligible for tax credits will pay more for insurance than they did before. They would especially include young adults who previously may have had a bare-bones health insurance policy with high deductibles and out-of-pocket expenses. Where they might have paid $60 a month for a such a policy, they now might see premiums three times that high.

“They would be the, quote unquote, loser,” Hatch-Vallier said.

But because the Affordable Care Act mandates that marketplace insurance cover essential benefits like emergency services, hospitalization and preventative care and caps out-of-pocket expenses at $6,350 for an individual plan, that individual would also receive more coverage.

The other major component of the Affordable Care Act – employer mandates – do not kick in until next year. Employers with more than 100 full-time employees will need to insure workers by 2015. Businesses with 50 to 100 employees will have to do so by 2016.

News accounts reported some employers were shifting employees to part-time status so they wouldn't have to offer health insurance. But a February analysis by the nonpartisan Congressional Budget office found no evidence for this nationally.

The ACA remains a volatile issue in the U.S. Senate race between former GOP Secretary of State Terri Lynn Land and Democratic U.S. Rep. Gary Peters. Land has called for its repeal while Peters voted for it. The conservative political advocacy group Americans for Prosperity has poured more than $5 million into ads attacking Peters for supporting it. Peters has hit back at Land with ads that claim she would take away preventive medical coverage for women.

Hatch-Vallier expects that the law may be tweaked in the years to come, perhaps by extending the threshold at which employers have to offer coverage from 30 hours a week to 40. Other changes are possible as well.

But for better or worse, she believes too many have signed up to turn back the clock.

“I do think it is here to stay.”