Inflation may be slowing at the grocery store and used car lot, but it's poised to take a giant leap in the cost of health care next year.
A report from the Michigan Department of Insurance and Financial Services shows that health insurance plans covering nearly 900,000 Michiganians are asking for double-digit rate increases for 2025.
The proposed increases would average 11.2 percent for small group policies - companies and organizations with fewer than 51 employees - and 10.7 percent for individual policies, including those sold on Healthcare.gov.
Requests for rate increases are the highest in recent years in Michigan. Last year, state regulators approved rate increases averaging 7 percent for small group plans and 5.3 percent for individual plans.
The public comment period on the rate proposals ended late last month, but DIFS is not expected to give final approval of the 2025 rates until October. A DIFS spokesman declined to comment Friday while the tariffs are under review.
Many who buy individual plans on the Healthcare.gov marketplace will be shielded from the full impact of the proposed rate increases thanks to the Affordable Care Act's generous tax credit subsidies, which are income-driven and rise with the price of insurance.
Additional Healthcare.gov subsidies for middle-income people began in 2021 and will run through 2025, which is projected to cost the federal government about $22 billion a year.
The state's largest insurer, Blue Cross Blue Shield of Michigan, is requiring rate increases of more than 11 percent for its small group plans covering more than 276,200 people and an average of just under 9 percent for its individual HMO plans and 7.5 percent for individual PPO plans.
In a statement Friday, Blue Cross attributed the need to raise rates to increased claims across all categories of medical services - inpatient, outpatient and office visits - and higher-than-average trends in pharmacy costs.
Blue Cross also said it has been able to keep the overall average rate increase for its small employer groups to about 5 percent over the past four years.
"We continue to monitor how medical and pharmacy costs affect small employer premiums," the statement said.
Priority Health is seeking an average rate increase of 13.2 percent for its small group plans, which currently enroll more than 91,000 people, and an average rate increase of 18.9 percent for its individual plans, which cover about 155,000 people.
The Grand Rapids-based insurer said Friday that the rate hike is necessary because of the rising cost of prescription drugs, especially GLP-1 diabetes and obesity drugs such as Ozempic, as well as rising health care utilization.
Priority Health also said in a statement that four out of five people in the individual market are eligible for a Priority Health plan that costs just $10 or less per month after federal tax credits.
"We work hard to keep rates affordable to ensure our members have access to high-quality care," Priority Health said in a statement. "Nearly 90 cents of every dollar is spent on member services."
Many insurance companies, including Blue Cross and Priority, citing high cost, have begun or will soon begin limiting coverage of GLP-1 drugs to diabetic patients and no longer cover them for patients who need these injectable drugs primarily for weight loss.
Without insurance, the cost of GLP-1 drugs can be about $1,000 per month.