Covered California announces 12.5% increase in 2018

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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.

The company will continue offering plans only in Santa Clara County and rural parts of Northern California and the Central Valley, forcing about 10 percent of people insured through Covered California to find a new health plan.

In Sonoma, Napa, Marin, and Solano counties, Kaiser has the largest share of health exchange Covered California enrollment, at 60 percent. Kaiser’s average rates are expected to go up between 3 and 7 percent, according to a report by Covered California, which can be read by clicking here.

Five insurance companies currently sell health plans to Sonoma, Napa, Marin, and Solano County residents through Covered California. After Anthem pulls out, Kaiser, Blue Shield, Health Net and Western Health Advantage will remain. Health Net has 1 percent of enrollees, Blue Shield has 16 percent, and Western Health Advantage has 15 percent.

Anthem blamed a shrinking individual insurance market and uncertainty about future federal health care policy for increasing uncertainty that makes it hard to plan and price insurance policies.

“As the Individual marketplace continues to evolve, Anthem will continue to advocate solutions that will stabilize the market to allow us to return to a more robust presence in the future,” Anthem spokeswoman Jill Becher said in a statement.

Avalere Health, a Washington-based consulting firm, reported last month that its analysis of 2018 rate filings in eight states found an average increase of 18 percent.

Obama’s health care law requires individuals and large businesses to buy health coverage or face a hefty fine, though Trump’s administration and Republicans in Congress have debated eliminating it.

The law provides two kinds of subsidies to help keep costs down for people with low to moderate incomes. Tax credits reduce monthly premiums for people who qualify. And payments to insurance companies cover a portion of their out-of-pocket costs, reducing the high deductibles and copays that are standard for plans in the individual market.

The latter payments, estimated at $7 billion a year nationally, have been challenged by Republicans in court, and Trump has refused to guarantee that he’ll continue making them. As recently as Monday, he has suggested he could cut them off.

Covered California officials said rates for subsidized middle-of-the-road silver plans will increase an additional 12.4 percent next year if federal authorities don’t provide assurances by late August that the cost-sharing payments will continue through 2018. Because the increase would affect only subsidized plans, the impact would primarily affect the federal budget with effects on consumers blunted, Lee said.

“It looks like the market in California is still stable despite some of the uncertainty that is causing a number of exits in other states,” said Cynthia Cox, a researcher at the Kaiser Family Foundation.

This report includes information from Business Journal Staff Writer Cynthia Sweeney, Press Democrat Staff Writer Martin Espinoza and the San Jose Mercury News.

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