California Obamacare Rates to Rise 13% in 2017

By Melody Petersen

July 19--Premiums for Californians' Obamacare health coverage will rise by an average of 13.2% next year -- more than three times the increase of the last two years and a jump that is bound to raise debate in an election year.

The big hikes come after two years in which California officials had bragged that the program had helped insure hundreds of thousands people in the state while keeping costs moderately in check.

Premiums in the insurance program called Covered California rose just 4% in 2016, after rising 4.2% in 2015 -- the first year that exchange officials negotiated with insurers.

On Tuesday, officials blamed next year's premium hikes in the program that insures 1.4 million Californians on rising costs of medical care, including specialty drugs, and the end of a mechanism that held down rates for the first three years of Obamacare.

For consumers, the impact will depend on whether they get taxpayer-supported subsidies for their premiums and whether they are willing to switch to less expensive plans that may come with higher co-pays and deductibles.

Obamacare has significantly reduced the number of uninsured Californians. Since the state's health insurance exchange began offering coverage in 2014, the share of Californians without health insurance has fallen from 17% at the end of 2013 to 8.1% at the end of last year, according to officials.

Rates are expected to jump in other states, too, although complete details won't be available until later this year. The healthcare.gov federal exchange provides insurance under the Affordable Care Act in 38 states. California and a few other states operate their own exchanges.

An analysis of 14 metro areas that have already announced their 2017 premiums found an average jump of 11%. The changes ranged from a decrease of 14% in Providence, R.I., to an increase of 26% in Portland, Ore., according to the analysis by the nonpartisan Kaiser Family Foundation.

The health law's next enrollment period begins a week before election day. Democratic presidential candidate Hillary Clinton wants to build on President Obama's program, while Republican Donald Trump wants to repeal it.

Peter Lee, executive director of Covered California, told the House Ways and Means Committee on July 12 that 2017 would be "a transitional year" for Obamacare, with rates seeing "significant adjustments" across the nation.

He said one reason for the increase was the end of a program designed to keep rates down during the insurance exchange's first three years. The program had assessed a fee on all health insurers and then redistributed those funds among carriers whose members had the highest medical expenses, Lee said.

He said that some insurers had also not charged enough in the first two years because they didn't have full data on the medical costs or health status of those signing up. Now they're adjusting to account for those higher costs.

And he blamed the overall rise in medical costs across the nation, which are going up far faster than inflation.

A year ago, Lee wrote an op-ed in The Times saying that Covered California's power in negotiating with insurers was allowing Obamacare to work in the state.

"We now have the full picture in California, where we are proving that health insurance exchanges can keep prices in check," he wrote.

The Affordable Care Act championed by Obama created the program more than six years ago.

While the law has improved care for millions of Americans -- for example, insurance companies can no longer set lifetime limits on care or exclude anyone because of a preexisting condition -- it contains few controls on overall costs.

Spending on the country's medical system averages more than $10,000 for every American, according to statistics released by the Obama administration this month, far higher than any other nation.

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