Mark Sanchez: This is just up, up, up, up, up for the cost of health coverage and health care in this country. And, you know, I consider this the story that just keeps on giving, unfortunately. And this is something that health insurers in the state and small group market for companies with 50 and fewer employees, they file their rates each spring for the coming year. And then during that year, they're allowed to refile as they get more data, as they learn more, they get more of the claims data, they can file an updated plan for companies that renew their policies in the latter half of the year. And this is what Blue Cross Blue Shield of Michigan and the HMO subsidiary Blue Care Network did.
Bottom line, if you are a Blue Cross Blue Care Network client and you renew your policies in the third quarter or the fourth quarter, you're looking at an average statewide increase of 13.1%. That's for Blue Cross Blue Shield. If you're a Blue Care Network client, and you renew in the second half of the year, you're looking at a 13.4% increase. Now these are more than what the regulators in the state approved last fall for 2026. And again, as you get more data, you need to update things. So, this is for Blue Cross Blue Shield customers, Blue Care Network customers that renew in the third and fourth quarter, very important to note, if you renewed your policy in the first quarter, or second quarter and most companies renew in the first quarter on January 1, this rate proposal will not affect you. This is only for companies that renew in the latter half of the year.
But bottom line, what it shows you is these cost increases, they're not easing, they're not going away anytime soon. And reading through the rate filing, Blue Cross Blue Shield is simply saying the claims experience, those claims trends for medical claims, for pharmacy, drug claims, they're what Blue Cross said, emerging unfavorable to the original 2026 small group filing. So that's why you have this updated filing.
It's before the state, the regulators at the Department of Insurance and Financial Services. We'll see how they rule on them. It's expected that they'll go through because they don't usually get changed much during, and I can't remember the last time they were rejected. Bottom line, this is just what's going on with health insurance for a number of years now.
We see claims are spiking. We're an aging population getting more healthcare. We're seeing these chronic conditions. We're seeing the high cost of specialty drugs. You know, JLP-1s have been in the news a lot in the last few years. It's something I'm also hearing from Blue Cross and I also reported on this a number of weeks back in talking about Priority Health’s 2025 results.
Your insurers and your hospitals are seeing just higher acuity cases. People are coming in and their condition is a little worse. Remember back four or five years ago with the pandemic, we were hearing about people delaying and deferring care. Well, now we're seeing cases where that asthma is progressing worse or tumors are showing up. They didn't get their mammography. They didn't get their colonoscopy three, four years ago.Now they're getting in and things are showing up that are a little further along than they should have been. So, there's a whole combination of factors really pushing these numbers and these claims trends and it's affecting every health insurer. And as I say, if you're one of two types of folks, either you're on a payroll or you pay a payroll, those are the types of folks who should care about the cost of health coverage. And that's pretty much everybody out there.
So, it keeps going up. Who knows when these trends may ebb at all or ease. And we have seen some data the last year or so, this comes from the Small Business Association of Michigan, that says small employers having to deal with these things, and we're talking about more than $20,000 a year now for a family health plan here in West Michigan. Some companies are deferring hiring or they're not replacing people or they're not adding those jobs as the company grows. And this is becoming a real significant issue in the economy. When might these costs get under control?And right now, the data is showing no time soon.
Patrick Center: If you are a business and you're hearing this news today, can you change your renewal schedule?
Mark Sanchez: Well, you can. You can change what's known as your plan year, but that's not going to make the costs, or the claims trends go away. For 2027, we'll know more in about another month and a half when the health insurers participating in the small group market for Michigan, when they file their rate proposals for 2027, we'll see if this can continue and the expectation of course is that it will. But you can change your plan here. That doesn't change those medical trends.
Patrick Center: The dairy industry in West Michigan making some big investments.
Mark Sanchez: Yeah, you know agriculture is a big industry in the state, a multi-billion dollar industry here and of course Ottawa and Kent County you have that horticulture and nursery industry. Here also in this region you have the West Michigan fruit belt and the Southwest Michigan fruit belt and then you have a lot of dairy farmers. So this is a story my colleague here at Crain’s Grand Rapids Abby Poirier did the other day we're really looking at what is more than $1.3 billion in investments for new production capacity across the region since last summer. And they're really betting on the growing appetite for protein-rich foods and specialty dairy beverages.
You look at four major projects announced just since the middle of last year. Fairlife, that's the plant in Coopersville off the freeway. It used to be an automotive parts plant by GM and Delphi. It's doing a $650 million expansion in Coopersville. Chobani has a $567 million investment in its local operations in Norton Shores. That's the yogurt maker. And then we've seen a couple of other smaller ones. And the Michigan Milk Producers Association last year announced an investment of up to $122.7 million in production in the Wheatland Township in Ovid facilities. And then over in Holland, Hudsonville Ice Cream is doing a $40 million expansion. What do all these investments need? They need milk.
So, if you're a dairy farmer in these parts right now, this is a business opportunity for you. And it's really just continuing the investment in that industry.As I said, agriculture is quietly a big industry in this state. And we have a number of obviously the producers, but also the processors in this region. So, this is good news for the economy and further diversifies the economy into a really an iconic long-term area. This area was built on agriculture. Then over the last century became more of a manufacturing and now professional services. But this is really an industry that's been around a long time and here are some big investments going into it.
Patrick Center: We're talking with Crain’s Grand Rapids Business staff writer Mark Sanchez. Western Michigan University lands a rather large gift for its business school.
Mark Sanchez: Yeah, this is an interesting story and how this came about. This was an announcement last week down in Kalamazoo. Western Michigan University's Haworth College of Business got a $17 million donation, the largest ever for the Haworth College. And it came from the estate of a California entrepreneur and real estate developer who was not associated with the university. But the trustee, of this gentleman's trust, is a 1983 graduate. And it's the Stan Lucas Trust. The gentleman who runs it is in charge of now disposing of the assets of this trust after Mr. Lucas passed away last year. And Mr. Lucas chose three donations to charity and said, okay, you and your other trustees, you decide on the fourth.
So, this gentleman, his name's Dan Grady, he's a business major who coached football at Western Michigan there in the early 1980’s. He was the banker for Stan Lucas and he remembers very fondly his time on campus at Western Michigan in the early 80s. And he started thinking about it. How could I then pay that back for giving me that opportunity and going on to a fulfilling career? So, he decided, and he pitched to his fellow trustees. Let's support the Haworth College, and that's where they are.
It's a $17 million donation to the Haworth College of Business in Kalamazoo, and it'll go to really focus on what's called TechNext. It's an innovation focused program that they work with Silicon Valley, the tech guys in Silicon Valley, to send some students there to learn. They have some entrepreneurship programs, they have student-led startups, they have curriculum development that this will fund and then focus on that area of entrepreneurism.
So it's really a nice sizable donation to the College of Business there in Kalamazoo at Haworth College and it was interesting how it all came together with, again, this gentleman, Stan Lucas, had no connection but a trustee of his estate recalls his days in Kalamazoo with quite fondness and he wanted to give to his alma mater.
Patrick Center: Crain's Grand Rapids Business staff writer Mark Sanchez, thank you so much.
Mark Sanchez: Thank you, Patrick.