The Sacramento Bee
July 19, 2016 12:10 PM
Covered California health care premiums to jump 13.2 percent in 2017
Sacramento regionfs rate hike will be slightly higher than statewide
average
Californiafs double-digit increase more than triples 4 percent rate hike in
2016
Consumer groups urge lawmakers to rein in insurance, drug costs
For the first time since launching three years ago, Covered California – the
statefs health insurance marketplace– announced double-digit rate increases,
averaging 13.2 percent for 2017.
Tuesdayfs announcement came as California consumers were encouraged to gshop
aroundh for cheaper coverage under the federal Affordable Care Act and lawmakers
were urged to do more to rein in medical costs.
gWefve known for a long time that 2017 would be a transition year,h said
Peter Lee, Covered California executive director, noting that one of the biggest
factors – the end of federal greinsuranceh payments to insurance companies – was
anticipated. He said that one-time adjustment alone added 4 percent to 7 percent
to premiums statewide. The rates still require review by state regulators.
Other factors include nationwide hikes in specialty drug costs and
gsubstantially sickerh consumers enrolling during the off-season special
enrollment period, Lee said. He said two of the statefs largest insurers –
Anthem Blue Cross and Blue Shield – had to account for large numbers of
less-healthy individuals who enrolled due to life changes, such as marriage,
children or loss of an employerfs coverage.
The premium hikes are not due to health insurer profits, he said. gWe kicked
the tires hard. c This isnft about health plans making big buckets of money.
Itfs about rising costs of health care.h Lee said profits averaged 1.5 percent
across all of the 11 health insurance plans under Covered California.
The average premium increase varies widely by geographic region. Some
consumers will see only single-digit rate hikes, Lee noted, while others will
have substantially higher rates. In the four-county Sacramento region, the
average rate – 13.4 percent – is slightly higher than the statewide average. In
San Francisco County, by comparison, the increase was nearly 15 percent.
For a 40-year-old Sacramento resident earning up to $23,760 a year, the
monthly premium under the most popular silver-level plan after a federal subsidy
would rise from $119 to $138.
Those who switch plans, Lee said, could actually pay less than last year or
only up to 5 percent more. Lee noted that 90 percent of Covered California
enrollees will still be eligible for federal subsidies to help cover their
premium costs. Currently, about 1.4 million individuals have Covered California
policies.
In each of the past two years, rate hikes for Covered California policies were about 4 percent, putting
the statefs three-year average at 7 percent. Nationwide, the weighted average of
premium hikes in 36 states that have posted 2017 rates was 22.7 percent,
according to Charles Gaba, a data analyst at ACAsignups.net who looks at state exchange enrollments.
Consumer groups said the projected rate hikes are an urgent reminder that
state regulators and legislators need to address prescription drug and other
health care costs.
gThese rate hikes indicate the urgency of getting more disclosure on health
care costs, especially prescription drug prices,h said Anthony Wright, executive
director of Health Access California, the statewide consumer advocacy group.
gWhy are certain drug prices going up 500 percent in one year?h
At least two pending state bills, SB 908 and SB 1010, call for more
disclosure of insurersf rate increases and specialty prescription drug
costs.
gNo one in California has the power to say no to a health insurance company
if they choose to hike rates unreasonably,h said Carmen Balber, executive
director of Consumer Watchdog, the nonprofit consumer advocacy group. She said
California is one of only a few states that doesnft give state insurance or
health care regulators the power to reject rate increases. gThe Legislature
needs to act to give regulators the hammer to reject rates that canft be
justified,h Balber said.
Charles Bacchi, president and CEO of the California Association of Health
Plans, said the higher rates reflect the growing cost of medical care.
gItfs important to remember that health care premiums are based on the cost
of medical care,h Bacchi said. gHow much it costs for an in-patient stay or a
doctor visit or a prescription drug are the largest determinants of health care
premiums.h
Even with this yearfs rate hike, he said, the current marketplace is still
preferable to conditions prior to passage of the Affordable Care Act, when
annual double-digit increases were routine and those with pre-existing
conditions were often unable to become insured.
For consumers, the new rates make it essential to shop for the right plan
when open enrollment starts Nov. 1. gWhat was the best deal last year may not be
the best deal this year,h said Wright of Health Access. gThe good thing is
people are no longer locked in because of pre-existing (health) conditions. They
have the ability to shop around.h
Covered Californiafs Lee said consumers are gin the driverfs seath to compare
rates and plans so they can avoid premium increases or keep the doctors they
prefer. He said nearly 93 percent of consumers will have a choice of three or
more insurance carriers for 2017 plans, and every resident will have at least
two choices.
In the Sacramento region, covering El Dorado, Placer, Sacramento and Yolo
counties, consumers will have seven health plans from which to choose: two from
Anthem, two from Blue Cross, as well as plans from Health Net, Kaiser Permanente
and Western Health Advantage. For a typical 40-year-old single person getting
federal assistance, the monthly premium could range from $35 to $656, depending
on income and the type of plan selected.
In October, policyholders will receive notices from Covered California and
their health care insurers about the new rate increases. During the open
enrollment period, running from Nov. 1 through Jan. 31, consumers can decide
whether to seek another carrier or stay with their current plan.
In the past three years, Lee said, the number of uninsured Californians – 8.1
percent as of December 2015 – has dropped by more than half, down from 17
percent in December 2013, the year before the federal health reforms
started.