DIFS Discloses Michigan Health Insurer 2024 Rate Increase Requests

Another round of increases, this time justified by the sudden popularity of Humira, Ozempic, Victoza, and Wegovy:

https://www.freep.com/story/money/business/2023/07/10/michigan-insurers-raise-premiums-ozempic-wegovy/70398045007/

Michigan insurers seek higher premiums amid soaring demand for weight-loss drugs
By JC Reindl - July 11, 2023

Health insurers in Michigan are looking to raise premiums again next year, with soaring demand for expensive diabetes and weight-loss drugs such as Ozempic and Wegovy contributing to what they consider necessary rate hikes.

A report from the Michigan Department of Insurance and Financial Services, which reviews and approves insurers' rates, shows that health insurance companies are seeking increases that would average 7.1% for their 2024 small group policies — those for businesses and organizations with fewer than 51 employees. There are currently 428,328 Michiganders enrolled in such plans.

Ozempic was originally approved by the FDA to treat people with Type 2 diabetes who risk serious health consequences without medication. In recent months, there has been a spike in demand for Ozempic, or semaglutide, due to its weight loss benefits, which has led to shortages. Some doctors prescribe Ozempic off-label to treat obesity.
For individual policies, such as those sold on the Healthcare.gov website, also known as Obamacare, insurers are seeking an average 5.5% increase. Those plans currently cover 372,999 Michiganders.

Last year, state regulators approved rate increases that averaged 5.8% for small groups and 5.5% for individual plans.

Insurance giant Blue Cross Blue Shield of Michigan cited "higher-than-average pharmacy cost trends" as among the reasons it needs to raise rates.

Some of those costs relate to the increasingly popular class of injectable GLP-1 drugs used for treating Type 2 diabetes and obesity.

In an interview Monday, Blue Cross Chief Pharmacy Officer Atheer Kaddis said the insurer began noticing a big increase in demand for the class of drugs starting late last year.

Some of the drugs, such as Ozempic, are specifically for Type 2 diabetes, yet also have significant weight-loss side effects because they suppress a person's appetite. Others, such as Wegovy, are specifically aimed at weight loss and aren't primarily for diabetes.

Kaddis cited two things for the uptick in demand: new diabetes treatment guidelines that recommend Ozempic-type drugs as first-line treatments and the widespread promotion on social media of the various drugs' weight-loss effects.

Some doctors have been prescribing the diabetes drugs for off-label use by patients who don't have diabetes and just want to go down in waist size.

"They are very effective for weight loss," Kaddis said. "Most people will see between 10 to 15% body weight loss when they’re on these drugs.”

But the drugs aren't cheap. The list price for popular GLP-1 drugs is roughly $1,000 to $1,200 for a month's supply — or $12,000-plus per year. Health insurers generally pay less than list price, although precisely how much less is not typically disclosed.

Since Feb. 1, Blue Cross has required prior authorization for the GLP-1 diabetes drugs including Ozempic. It took this step to ensure that only diabetes patients are getting the drugs — not people simply wanting to lose weight.

However, Blue Cross is continuing to cover the off-label use of Ozempic-type drugs until Aug. 15 for the patients who were on the drugs prior to Feb. 1. According to Kaddis, Blue Cross found that about 25% of patients on the diabetes drugs were using them off-label.

Health Alliance Plan also has been experiencing high pharmacy costs stemming from the popularity of GLP-1 drugs.

Margaret Anderson, a HAP senior vice president, said the insurer expects the drugs to ultimately have a positive effect on the overall health of patients who are taking them in the next 12 to 18 months, "so right now we are paying those upfront costs."

HAP currently is not covering the Ozempic-type drugs for patients who don't have diabetes yet wish to use them off-label, she said.

"We’re working really hard to make sure that these drugs are covered for the 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."

To be sure, weight-loss drugs aren't the sole reason why health insurers want to raise premiums for 2024.

Blue Cross has also seen significant increases in price and demand for specialty pharmaceuticals used to treat cirrhosis and dermatitis and for the drug Humira. For early 2023, The Blue's entire book of business saw pharmacy cost increases of over 20%.

HAP is seeking a 12.8% rate increase in 2024 for its small group health plans, largely as a result of higher demand for preventive care, health screenings and other services.

“We’re just seeing a very high amount of utilization," said Anderson of HAP. “We’re happy that people are getting out and getting the care, it’s just that there is a tremendous amount of pent-up demand still in the system we’re needing to work through.”

The Department of Insurance and Financial Services is accepting public comments on the proposed rate increases until July 24. Comments can be sent to the email address DIFS-healthratecomments@michigan.gov.

The actual two page DIFS release, should you be interested, can be downloaded here.