latimes.com/business/la-fi-calif-health-rates-20130524,0,7036553.story
New California health insurance rates unveiled
Health insurance premiums for Covered California, the state-run marketplace,
are lower than expected.
By Chad Terhune, Los Angeles Times
5:59 PM PDT, May 23, 2013
Amid anxiety over rising costs from the federal healthcare law, California
received better-than-expected insurance rates for a new state-run marketplace,
but many consumers still won't be spared from sharply higher premiums.
Three years after President Obama's landmark law was passed, the state
unveiled the first details Thursday on what many Californians can expect to pay
for coverage from 13 health plans offering policies in the state's exchange, in
which as many as 5 million people will shop for coverage next year.
Developments in California are being watched carefully around the country as
an important indicator of whether the healthcare law can deliver on its promise
to expand health coverage at an affordable price. Many Republicans, insurance
executives and other critics of the law have been warning that consumers are in
for a shock next year when insurance companies raise rates to comply with the
law's many new requirements.
Supporters were upbeat after an initial look at the proposed premiums, while
critics remain unimpressed.
"These rates are way below the worst-case gloom-and-doom scenarios we have
heard," said Peter Lee, executive director of Covered California, the state
agency implementing the healthcare law. "But let's be clear, some consumers will
have prices that go up. There may be some sticker shock."
The new government-run market is aimed at many of the state's uninsured and
at Californians who already purchase their own health insurance. The majority of
Californians receive health coverage from their employers and are not among
those targeted for enrollment.
The health plans selected by the state will sell uniform benefits, each
offering four broad categories of coverage called Platinum, Gold, Silver and
Bronze.
Platinum policies will offer the most comprehensive benefits and carry the
highest prices, followed by Gold, Silver and Bronze. The Bronze package will
have the lowest premiums, but people would be on the hook for a greater share of
their medical bills. The rates revealed Thursday still must be reviewed by state
regulators.
Within each of those four benefit categories, plans will have the same
co-pays, deductibles and limits on out-of-pocket medical expenses.
As a result, consumers will be able to compare insurance prices in their
regions more easily, once these rates are finalized by July.
Consumers shopping in the exchange will have three to six health insurance
plans to choose from in each of the state's 19 regions.
In the south Los Angeles County region, for instance, rates for a 40-year-old
purchasing a Silver plan ranged from $242 a month through Health Net Inc. to
$325 a month through Kaiser Permanente. Overall, Los Angeles County had the
lowest premiums statewide for the Silver plans.
The average premium for individual plans sold through EHealthInsurance in
California last year was $177 a month. Covered California said the average
premium for the three lowest Silver plans statewide was $321 a month, albeit for
more comprehensive benefits.
Overall, state officials said they can't estimate yet how much rates will
rise on average. Blue Shield of California, one of the winning bidders in the
exchange, said its existing individual policyholders would pay about 13% more,
on average, for coverage in the state marketplace.
These rates "came in below what people legitimately expected them to be,"
said Paul Markovich, Blue Shield's chief executive.
Comparing the proposed rates for next year with current premiums is
difficult, officials and experts agree, because the healthcare law mandates next
year's plans to offer richer benefits and to limit consumers' out-of-pocket
expenses.
Democrats in Washington were quick to hold up California's announcement as a
sign that the federal healthcare law is working and bringing a healthy dose of
competition to a dysfunctional insurance market in which millions of people have
been denied coverage because of their medical history or subjected to punishing
rate hikes year after year.
Most Republican-led states have resisted the healthcare law and declined to
set up their own state exchanges. Instead, they have opted for the federal
government to step in.
Starting in January, most Americans must have health insurance or pay a
penalty under the federal law.
Some industry experts said California's outlook on rates remains far too
optimistic in light of the hefty increases some consumers will see.
"California has no right to declare victory on rates," said Robert Laszewski,
a healthcare consultant in Virginia. He said the sample premiums released by
Covered California were about 50% higher than rates for the most commonly sold
health plans in the individual market primarily because of increased benefit
requirements. "If rates come in higher, it speaks to the sustainability of the
Affordable Care Act."
Federal premium subsidies will ease the bite on many people's wallets. In
California, individuals earning less than about $16,000 a year will qualify for
an expansion of Medi-Cal, the state's Medicaid program for the poor. Above that
threshold, individuals making less than $46,000 a year and families earning
below $94,000 annually will qualify for federal subsidies.
One of the bigger risks is that high premiums turn off healthier,
middle-income households that aren't eligible for that federal assistance and
have to pay the full premium. Rates could skyrocket if the exchange fails to
enroll enough of those people to offset the higher costs of sicker, poorer
policyholders.
Katharine King, 59 and a self-employed concert and event producer in Santa
Monica, already pays $497 a month for her individual health insurance from
Anthem Blue Cross. She wouldn't qualify for federal premium help based on her
income. Using the state's online calculator, which doesn't yet reflect the final
rates, her premiums could shoot up to nearly $600 a month next year.
"The Affordable Care Act is still not all that affordable unless you qualify
for a federal subsidy, which I will not," King said. "It will likely be another
case of the middle class kind of getting screwed."
Alfredo Ceron, 44, an uninsured painter in Los Angeles, has less to worry
about with these rates. He said he earns about $100 a day when he has work,
which means the federal government would pick up most of the tab for him and his
two adult children who still live at home.
"I'd like to get my family covered," he said while waiting in line at a
recent downtown festival to get more information about the new insurance
options.
The 13 health plans selected by the state include all four of California's
largest insurance companies. They are Kaiser Permanente, Anthem Blue Cross, Blue
Shield and Health Net.
The other nine health plans selected were smaller regional players and
insurers that have traditionally served lower-income and Medi-Cal patients. They
are Alameda Alliance for Health, Chinese Community Health Plan, Contra Costa
Health Services, L.A. Care Health Plan, Molina Healthcare, Sharp Health Plan,
Valley Health Plan, Ventura County Health Care Plan and Western Health
Advantage.
In Los Angeles County, which was divided into two regions, six companies will
compete for policyholders. They are Anthem Blue Cross, Blue Shield, Health Net,
Kaiser Permanente, L.A. Care and Molina.
California Insurance Commissioner Dave Jones said he was troubled by the lack
of choice in some markets. "There are only three statewide health insurers
selling in Covered California," Jones said, "which means less statewide
competition than we'd hoped to see in the new marketplace."
chad.terhune@latimes.com
Times staff writer Noam Levey in Washington contributed to this
report.
Copyright © 2013, Los
Angeles Times