Last month, Covered California, the state health insurance marketplace created under the Affordable Care Act with over 1.5 million Californians enrolled, unveiled the health plans and rates available in 2017. The preliminary average rate increase of 13.2% is higher than the previous two years of 4% hikes, yet the average rate over three years remains lower than the annual double-digit rate hikes prior to passage of the Affordable Care Act.
While these rates hikes aren’t as bad as the annual double-digit increases before the Affordable Care Act, that’s not much comfort to consumers whose don’t see their paychecks increase by the same percentage. These rates show why California policymakers must continue to work to address the cost of care and coverage. California regulators need to scrutinize these rates to make sure they are justified, especially with regard to the cost of care, including the growing price of prescription drugs. Health Access continues to be concerned about the consolidation in health care, and note that the two plans with the double-digit rate increases are the ones with recent or pending mergers.
What does this mean for consumers?
Until more systemic reforms are implemented, consumers have some options available to them. California consumers should take full advantage of the available subsidies, and the ability to shop around in Covered California, since they are no longer locked into a plan because of pre-existing conditions. Californians should compare – the plan in your region that was the best deal this year may not be the same next year. Around 90 percent of Covered California enrollees actually are not directly impacted by these rate hikes, but rather get subsidies so their premium is capped at a percentage of their income. Enrollees should double-check to ensure they get this financial assistance. The more premiums rise, the more families will be eligible for this help with affordability.
What does this mean for policymakers?
These rate hikes increase the urgency for California legislators to act this year on dealing with prescription drugs prices and health care costs in general. California should at least ensure that consumers facing unjustified rate hikes get notice and the opportunity to shop around, as proposed in SB908 (Hernandez). California can require better notice and disclosure of prescription drug price hikes, to allow for better transparency and negotiation as very expansive specialty drugs enter the market, as proposed in SB1010 (Hernandez).
These preliminary rates are subject to a 60-day public comment period, during which time they will be reviewed by the California Department of Managed Health Care and the California Department of Insurance. Consumers can submit their comments directly to these state regulators. California is one of only a handful of states with the power to actively negotiate for the best price and value–including to standardize benefits to facilitate apples-to-apples competition. However, it is also a state that does not have full rate regulation, and can do more to disclose and address health care costs, from unjustified rate hikes to high prescription drug prices.
- Sacramento Bee: “Covered California health care premiums to jump 13.2 percent in 2017,” July 19, 2016
- Modesto Bee: “Health exchange premiums will rise 8.4 percent on average in region,” July 19, 2016
- KQED: “Covered California Premiums Going up 13.2% Next Year. Here’s Why.” July 19, 2016