More on rates…

This week, Covered California put out a report done by the consulting group Milliman to see what premiums might be like in 2014 and beyond. This generated headlines about increased rates in some papers and decreased rates in others.

The stories were better than the headlines in providing additional context, although even those had space limitations. Even the Washington Post felt the need to dedicate a long blog post to the study.

I would highlight what the LA Times wrote in its editorial, providing caution about over-reading the study. Some key points:

* For individual market (now 6-8% of California population), individuals were left all alone at mercy of big insurers–with many shut out completely due to pre-existing conditions.

* Those under $95,000 for a family of four will get financial help so premiums are not more than 2%-9.5% of income.
* Most will pay less for premium and cost-sharing; those who choose to pay more in premium will get better benefits and value.

We made similar points in our last blog post, which was highlighted in Health Wonk Review this week at Worker’s Comp Insider by Julie Ferguson.

We are pleased that estimates show that most consumers buying coverage in the individual market will get financial help and see their premiums go down–but more can be done to improve affordability. Particularly important is that almost all will be getting better coverage and value for their dollar, and no one will be shut out due to health status. Most will see premiums go down, but the slice for whom premiums go up will get better coverage and less cost-sharing when actually getting care–and they have an option of a cheaper premium plan as well.

These numbers are estimates, based on some variables that are in our control. As Covered California itself states, there are factors in our control to do more to bring down the cost of coverage, using the tools of the Affordable Care Act to provide tough negotiation with the health plans for the best value, aggressive rate review and regulation, increased enrollment, and fostering apples-to-apples price competition.

* California has adopted an “active purchasing” exchange that can bargain for the best value. That doesn’t mean that rate will go down, but at least individuals will get a similar deal to what large employers get.
* Californians have already gotten over $175 million in savings from the Department of Insurance and the Deparment of Managed Health Care getting insurers to roll back or retract rate hikes. California should continue to use its new rate review authority under the ACA aggressively, and consider rate regulation (including a ballot measure pending next year).
* It’s not just negotiation and regulation but competition that can help bring down rates. Covered California fosters that competition by structuring a market where consumers can make easy comparisons and swtich plans, encouraging price competition. Today, some patients are concerned about switching plans due to pre-existing conditions, or concern that a new plan may or may not cover such basic services. Those concerns are addressed in 2014.
* Premiums may rise or fall depending on how aggressively we enroll people in coverage: a small and sicker pool could mean higher premiums, but a bigger and broader pool means the risk and cost of care is spread out of many more people. As the LA Times editorial states, there’s a big incentive to get as many Californians enrolled as soon as possible.
* There is a longer-term agenda to bring down (or at least slow the rate of growth) of care and coverage at the base source around the actual delivery of care. Covered California plans to start to use its purchasing power to get insurers and providers to really focus on reforms to improve quality and reduce costs.

We don’t know what the rates will start at, but we no longer have to accept rates as they are–the ACA gives us the framework and the tools to make a difference, but it will be up to us in California to decides whether to use those tools.

Health Access California promotes quality, affordable health care for all Californians.
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