Michigan health insurers are looking to raise premiums again next year, with rising demand for expensive diabetes and weight-loss drugs like Ozempic and Wegovy contributing to what they see as needed rate hikes.
A report from the Michigan Department of Insurance and Financial Services, which reviews and approves insurer rates, shows health insurance companies are seeking hikes that would average 7.1% for their 2023 small group policies , those for businesses and organizations with fewer than 51 employees. There are currently 428,328 Michiganders enrolled in such plans.
For individual policies, such as those sold on the Healthcare.gov website, also known as Obamacare, insurers are looking for an average increase of 5.5%. Those plans currently cover 372,999 Michiganders.
Last year, state regulators approved rate hikes averaging 5.8% for small groups and 5.5% for individual plans.
Michigan-based insurance giant Blue Cross Blue Shield cited “above-average drug cost trends” as one reason it needs to raise rates.
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Some of these costs relate to the increasingly popular class of injectable GLP-1 drugs used to treat type 2 diabetes and obesity.
In an interview Monday, Blue Cross chief pharmacy officer Atheer Kaddis said the insurer has begun to see a sharp increase in demand for the drug class since late last year.
Some of the drugs, such as Ozempic, are specifically for type 2 diabetes, but they also have significant side effects on weight loss because they suppress a person’s appetite. Others, like Wegovy, target weight loss specifically and aren’t primarily for diabetes.
Kaddis cited two things for the surge in demand: new diabetes treatment guidelines recommending Ozempic-type drugs as first-line treatments, and widespread social media promotion of the weight-loss effects of various drugs.
Some doctors have prescribed diabetes drugs for off-label use by patients who don’t have diabetes and just want to shrink their waists.
“They’re very effective for weight loss,” Kaddis said. “Most people will see a 10 to 15 percent body weight loss when they take these medications.
But the drugs are not cheap. List price for popular GLP-1 drugs is around $1,000 to $1,200 for a month’s supply or $12,000 and more per year. Health insurers generally pay less than list price, though exactly how much less isn’t typically disclosed.
As of Feb. 1, Blue Cross has applied for prior authorization for GLP-1 diabetes drugs, including Ozempic. It took this step to ensure that only diabetic patients receive the medications and not people who simply want to lose weight.
However, Blue Cross continues to cover off-label use of Ozempic-type drugs through August 15 for patients taking the drugs before February 1. According to Kaddis, Blue Cross found that about 25 percent of patients on their diabetes medications were using them off-label.
Health Alliance Plan has also experienced high drug costs resulting from the popularity of GLP-1 drugs.
Margaret Anderson, senior vice president at HAP, said the insurer expects the drugs to have a positive effect on the overall health of patients who take them over the next 12 to 18 months, “so right now we’re paying for those upfront costs.”
HAP does not currently cover Ozempic-type drugs for patients who don’t have diabetes but want to use them off-label, he said.
“We’re working very hard to make sure these drugs are covered for people who really need them,” Anderson said. “There are people who will ask if they can just pay out of pocket. And that’s between them and their doctor.”
Truth be told, diet drugs aren’t the only reason health insurers want to raise premiums for 2024.
Blue Cross has also seen significant increases in the price and demand for specialty pharmaceuticals used to treat cirrhosis and dermatitis, and for the drug Humira. As of early 2023, The Blue’s entire book of business has seen drug costs increase by more than 20%.
HAP is targeting a 12.8 percent rate increase in 2024 for its small group health plans, largely due to increased demand for preventive care, health screenings and other services.
We’re just seeing a very high amount of utilization,” said HAP’s Anderson. We’re happy that people are getting out there and getting treatment, it’s just that there’s a huge amount of pent-up demand still in the system that needed to be addressed. .
The Department of Insurance and Financial Services is accepting public comments on the proposed rate increases through July 24. Comments may be sent to DIFS-healthratecomments@michigan.gov.
Contact JC Reindl:313-378-5460orjcreindl@freepress.com.Follow him on Twitter@jcreindl.
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