News Summary

Michigan health insurers, including Blue Cross Blue Shield and UnitedHealthcare, are seeking record rate increases for individual and small group plans in 2026. Proposed hikes average 16.8% for individuals and 11.1% for small groups, primarily due to rising healthcare utilization and the expiration of premium tax credits. This situation could significantly impact millions of ACA enrollees, pushing affordability concerns to the forefront. Stakeholders are encouraged to provide feedback before the July 31 deadline as insurers adjust to these economic pressures.

Detroit – Michigan health insurers are proposing record premium rate increases for the year 2026, amid significant changes in the healthcare landscape, including the expiration of essential premium tax credits. The average proposed rate hikes stand at 16.8% for individual plans and 11.1% for small group plans, affecting employers with fewer than 51 staff members.

Leading the requests, Blue Cross Blue Shield of Michigan is asking for an 18.2% increase in individual plan rates and an 11.2% increase for small group plans. This represents a notable rise from their previous year’s requests of 7.5% and 11.5%, respectively. The company attributes these proposed increases to significantly higher utilization of healthcare services and soaring pharmacy costs, which combined, led to a $3 billion increase in medical and pharmacy service expenses in 2024 compared to 2023. This surge has resulted in a substantial $1.7 billion underwriting loss for Blue Cross in the same year.

Another major player, UnitedHealthcare, is seeking the steepest rate adjustments, with a 25.3% hike for individual plans and 16% for small group plans. This marks a dramatic increase from last year’s minimal adjustments of 0.6% and 4.9%, respectively. The Meridian Health Plan of Michigan is also proposing a 16.9% increase for individual plans, a sharp rise from the 3.2% increase requested in 2024. On a similar note, Priority Health suggests a 14.4% rate increase for individual market plans and 9.7% for small groups in 2026, also citing rising pharmacy and healthcare service costs.

The primary factor driving these significant rate increases is the impending expiration of premium tax credits as part of the Affordable Care Act, which is set to conclude in 2025. Experts predict that the discontinuation of these credits could result in millions of Americans abandoning their Affordable Care Act (ACA) insurance plans due to increased out-of-pocket expenses. As a consequence, insurers expect higher premiums as they prepare for a potential loss of enrollees, leading to a steeper risk pool as only sicker individuals may remain in the market.

Insurers are expressing concern over the continued rise in healthcare claims, particularly from a population that increasingly requires care. This situation is anticipated to worsen, putting additional pressure on premium costs. Health plans are also blaming the increased costs on the growing demand for services including behavioral health and specialty treatments.

Furthermore, ongoing changes to funding sources, particularly regarding Medicaid due to provisions in former President Trump’s tax legislation, are making it difficult for rural hospitals and healthcare providers to sustain operations. These changes could potentially result in a financial impact of up to $15 billion on Michigan hospitals, stemming from revised provider tax rates and state-directed payments.

Health insurers will continue to gather comments on these proposed rate increases until July 31 through the Michigan Department of Insurance and Financial Services. Policyholders, employers, and health advocates are encouraged to voice their opinions during this comment period, as the decisions made could have lasting implications on the availability and affordability of healthcare in the state for 2026 and beyond.

The situation remains dynamic, reflecting ongoing pressures from high prescription drug prices and increasing medical service demands, with no indications of relief on the horizon. Stakeholders and analysts alike will be closely monitoring the developments as insurers navigate these challenging economic circumstances and their implications for consumers.