Tuesday’s announcement on Juky 19, 2016, comes as many other states report big increases in insurance premiums for the fourth year of President Barack Obama???s health overhaul. In the four-county Sacramento region, the rates will be slightly higher than the state average, at 13.4 percent. But people who lose their coverage during the year because they lose a job, get divorced, or move (among other eligibility criteria) are able to buy a plan through Covered California outside normal enrollment periods.
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Covered California Executive Director Peter Lee says two large insurers, Anthem Blue Cross and Blue Shield of California, drove much of the average increase. “That’s the power of shopping”.
Mr. Lee contends the opportunities to shop and save show that California has succeeded in building a competitive marketplace for health insurance, with rate increases that are still below trends in the individual market before the Affordable Care Act was passed.
The Affordable Care Act championed by Obama created the program more than six years ago. But today, Covered California, as it’s known, announced an average statewide premium increase of 13.2 percent for 2017, setting off a round of criticism and defensive responses. But switching health plans may require them to change doctors, depending on the provider networks offered by each plan.
“These outrageous premium hikes are the outcome of California’s failure to adopt health insurance premium regulation like the majority of the states and the disappearance of federal subsidies for insurance companies to even out bumps in the road”, said Jamie Court, president of Consumer Watchdog, which sponsored an unusccessful rate regulation initiative in 2014.
Nearly 90 percent of Covered California customers get federal subsidies that will help cover the premium increases.
“Some rate increases are necessary to cover the cost of care as more and more Californians use medical services that have become increasingly expensive each year”.
Lee said the average rate increase reflects the cost of medical care for consumers, not excessive profit. But the nation’s largest health insurer is leaving Covered California after just one year of minimal participation – part of a broader pullback nationwide after the company posted heavy losses on individual plans.
“Covered California does not negotiate by table-pounding, but rather by providing good data on the risk mix of who is enrolled and working the health plans to garner maximum enrollment”, Lee said in his remarks before Congress. “In 2015, we provided data that proved Covered California enrollees were healthier and presented less risk to insurance companies than anticipated, which helped drive down the cost of health premiums”.
Bacchi said consumers here also have more choice. “The more premiums rise, the more families will be eligible for this help with affordability”. Insurers didn’t know who was going to sign up for their plans, and basically had to guess how sick they would be and how much care they would need, then factor that into their premium rates.
Before Tuesday’s announcement, it was believed that insurance rates would spike 8 percent.
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Covered California is an independent part of the state government whose job is to make the new market work for California’s consumers.
