J.C. Reindl

Detroit Free Press

DETROIT — The sticker price for health insurance plans sold on Michigan's Affordable Care Act exchange will jump an average 26.9% next year under new rates announced Wednesday by state officials.

The rates will be in effect Nov. 1, when the annual enrollment period begins for individuals and family households on the Healthcare.gov exchange. Open enrollment runs to Dec. 15, which is half as long as last year.

To be sure, more than 80% of consumers in Michigan who buy insurance on the exchange do not pay full price because they qualify for the health care law's tax credit subsidies. Those subsidies increase as the cost of premiums increase.

That means taxpayers in general foot much of the bill when insurance companies raise rates.

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For their part, insurance companies say they need higher rates in 2018 because of rising health care costs, especially for specialty drugs, which on average can cost more than $54,000 per year, according to Blue Cross Blue Shield of Michigan.

Other reasons for the higher premiums include:

• A significant number of enrollees each year who stop paying their premiums once they've received services or procedures.

• People under age 26 who stay on their parents' insurance, or who prefer to pay tax penalties instead of signing up for insurance, leaving older people with higher costs in the insurance pool.

Still, this latest year-over-year price hike is especially big as a result of the Trump administration's recent announcement that it will stop a type of subsidy called cost-sharing reduction payments.

Those payments reimbursed insurance companies for offering very low deductibles and co-payments on plans to individuals and families with incomes up to 250% of the poverty line.

However, consumers who meet that guideline and qualify for tax credit subsidies should not see much of a price difference because their subsidy will grow to cover the higher premium costs, according to health care experts.

The Michigan Department of Insurance and Financial Services announced the final 2018 insurance rates, which averaged a 0.1% smaller increase than what insurance companies initially had sought.

For small group policies — businesses with fewer than 51 employees — regulators approved rates an average of 4% higher in 2018.

“Rates are increasing across all plan levels," the department's director, Patrick McPharlin, said in a statement. "It is important to shop and find the plan that best fits you and your family."

The year-over-year rate increase for the individual market plans was 16.7% from 2016 to 2017, and 6.5% from 2015 to 2016.

Blue Care Network of Michigan — the most popular insurer on the exchange — will raise its rates by an average 22.6%. The second most-popular insurer, Blue Cross Blue Shield, will increase rates by 31.7%.

Roughly 300,000 Michiganders are expected to enroll in a plan during this year's open enrollment, down from previous years. The tax penalty is 2.5% of household income or $695 per adult, whichever is higher.

Follow J.C. Reindl on Twitter: @JCReindl