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Why health insurance companies are pushing for 17% rate increase next year

Insurance companies in Michigan are asking for, on average, 17.2% higher rates for individual plans next year.
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Insurance companies in Michigan are asking for, on average, 17.2% higher rates for individual plans next year.

Our conversation with Marianne Udow-Phillips

The insurance companies offering health plans on Michigan's public exchange have a collective eye fixed on January 1, 2017.

That's when they hope they'll be able to start charging, on average, 17.2% more for individual health insurance plans.

Marianne Udow-Phillips joined us today to talk about what's behind these hefty rate increase requests.

She explained that for the first few years under the Affordable Care Act, insurance companies didn't know very much about who they'd be covering, and were largely guessing at what they should charge for coverage.

Now, a lot of them are finding out that they guessed low.

"They've now had a couple of years of experience with the population. Many people who came in on the exchange had not been insured before, and they had a big backlog of medical care needs. And so people have been using health care at higher rates than the insurers actually expected," she told us.(Subscribe to the Stateside podcast oniTunes,Google Play, or with thisRSS link)


Aside from having a larger data set to work with, insurers are also preparing for several programs provided by the federal government to help stabilize rates through the first few years of the ACA to expire. 

Some people might feel like their insurer is taking advantage of them and hiking prices now that they're on the hook, but Udow-Phillips says profiteering isn't the motive here. 

"The health plans now have a little more information, and are setting more rates that are reflective of the total cost that people are experiencing," she said. “The real reason that health care insurance is really high-cost is because health care is high-cost.”

The insurance companies' requests will be heavily scrutinized by regulators at the state and federal levels to confirm that the data support the requested increases, and final rates are expected to be posted by November 1.

GUESTMarianne Udow-Phillips is director of theCenter for Healthcare Research and Transformationat theUniversity of Michigan Health System.


Copyright 2021 Michigan Radio. To see more, visit Michigan Radio.

Ryan is interning as a Production Assistant for Stateside. An Ypsilanti native, Ryan received a Music Production/Engineering certificate from Washtenaw Community College and is currently studying at Eastern Michigan University, pursuing degrees in Electronic Media and Film as well as Electrical Engineering Technology. For as long as he can remember, Ryan has loved public radio. Ryan is a big fan of podcasts, movies, longboarding, playing the drums, video games and spicy foods.