Monthly premiums for California health insurance plans sold under the Affordable Care Act will rise by an average of 12.5 percent next year, officials said Tuesday. It will be the second consecutive year of double-digit rate increases statewide, though rates in Sonoma County are expected to rise an average of 7.4 percent.
Anthem Blue Cross, a major insurance company, will stop offering plans in most of California, but the state will avoid the massive market upheaval that has left some states with just one insurer or none at all to serve the individual market. Anthem will continue to offer insurance in Mendocino and Lake counties, but will no longer cover residents in Sonoma County or in Napa County.
Covered California’s announcement on 2018 pricing comes at a time of extreme uncertainty about the future of the U.S. health care system. A Republican plan to unwind key pieces of the Affordable Care Act failed in the U.S. Senate last week, but President Donald Trump has repeatedly urged lawmakers to keep working on it. Trump has threatened to end payments that insurance companies receive to keep down out-of-pocket costs for lower-income consumers.
Premiums for consumers on silver tier plans, the most popular, could spike even more if those subsidies are taken away, officials said.
Rates would not have climbed so high, Covered California Executive Director Peter Lee said Tuesday, if insurers weren’t worried that the White House might work to undermine the nation’s health care law.
“We were hopeful that this year would be back to normal,” Lee said during a conference call with reporters. But, “uncertainty in Washington is affecting consumers today.”
The average 12.5 percent increase is down just slightly from last year, when premiums rose by more than 13 percent. Consumers could lower their increase to about 3 percent if they switch to the lowest-priced plans, officials said, though that could require them to change doctors. Insurance plans for next year will be available for purchase in California between Nov. 1 and Jan 31.
Covered California sells health plans to about 1.4 million people who don’t get coverage from an employer or from the two large government-funded programs, Medicare and Medi-Cal. The exchange is a central piece of Obama’s health insurance overhaul, allowing people to compare policies and collect a subsidy if they qualify based on income.
Covered California customers who get federal tax credits to lower their monthly premiums will be shielded from all or part of the higher costs because their subsidies will rise in tandem. But the higher prices will be felt by the more than 1 million Californians who have unsubsidized coverage in the individual market, most of whom don’t get their plans through Covered California.
Trump maintains that Obama’s health law is imploding and must be fixed, pointing to rising costs and declining choices in the individual insurance market. A handful of rural counties around the nation have been left without any insurers offering plans through Affordable Care Act marketplaces, and many others have just one option.
Lee said the state shows that insurance markets are not failing. “We in California ... are not just stable, but stable in a way that is truly working for consumers,” Lee said.
California has seen costs rise, but it has maintained a competitive marketplace with several competing options for most consumers statewide. All 11 existing insurers will continue to provide coverage next year, but Anthem Blue Cross is significantly reducing its coverage.