California’s Health Plan Premiums to Increase 13.2% in 2017

California’s current premium rates under Obamacare are estimated to jump 13.2% next year, despite keeping their average rate increases lower than much of the country during the first few years of the program, according to the Covered California exchange.

For the past two years, California averaged a 4% premium increase for its 1.4 million enrollees. However, an increase in overall medical costs, specifically for expensive specialty drugs, and the expiration of two federal programs that help insurers with expensive claims led to the substantial jump in 2017.

The consulting firm, Avalere Health, reported that the average rate increase for Medicare silver plans on the state and federal health insurance exchanges was 11 percent across 14 states. If consumers chose the lower-cost silver plan, the premium increase is only set to go up by 8%. Note: The rate increases only apply to Americans who purchase their own coverage in the individual market, not to those who get their health insurance through work or government programs (ie, Medicare and Medicaid).

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The two federal programs that helped offset costly medical claims and cover sick patients are set to expire at the end of the year. Insurers are now required to accept all applicants regardless of their medical histories.

Peter Lee, executive director of Covered California said in a statement, “Under the new rules of the Affordable Care Act, insurers face strict limits on the amount of profit they can make selling health insurance. We can be confident their rate increases are directly linked to health care costs, not administration or profit, which averaged 1.5 percent across our contracted plans.”

California consumers hoped UnitedHealth Group Inc. would join the state-run insurance exchange. However, the top four insurers do not include UnitedHealth, and are currently led by Blue Shield of California and Anthem Inc., who control more than 90% of enrollment. 

Major insurers around the country seek to announce bigger rate increases during the open enrollment period this election year as the candidates discuss the future of Obamacare which will likely spread the premium rate increase nationwide. -Julie Gould

Reference:

Bartolone P, Terhune C. Covered California’s Health Plan Rates to Jump Sharply in 2017. NPR. Published July 19, 2016. Accessed July 20, 2016.