Proposed rate increases for 2016 health insurance coverage that a dozen carriers will sell on Covered California’s state-run exchange will be just 4% compared to the 4.2% rise approved for 2015.
The recently announced statewide weighted average was hailed as a dramatic departure from annual double-digit rate increases in the state’s individual health insurance market that preceded the Affordable Care Act. It also extends beyond exchange plans, since health insurance carriers in the state are required to offer the same products at the same prices both on and off the exchange.
“This is another year of good news for California’s consumers and further evidence that the Affordable Care Act is working,” says Covered California Executive Director Peter Lee. “Covered California is holding the line on rates and keeping coverage within reach of hundreds of thousands of consumers, while giving them more choices than ever before.”
Most of the Golden State’s exchange plan enrollees are expected to pay less for their monthly premiums or an increase of less than 5% if they re-enroll in their current plan. Consumers also can reduce their premiums by an average of 4.5%, and even beyond 10% in some regions, if they choose a lower-cost plan within the same metal tier.
Lee noted “the weighted average increase for consumers who stay in their current plan is only 1.8%” in the two regions that encompass Los Angeles, the state’s most populated area, and they can shave 11% off their rate “by moving to a lower-cost plan in the same metal tier.” The weighted average increase in Northern California is 7%, while consumers who shop for a lower-cost plan would potentially be able to hold their rate increase to an average of 1%.
Lee credited a good “risk mix” among more than 1.3 million Covered California enrollees as providing substantial negotiating power that helped limit rate hikes. “The sheer numbers and overall health of our enrollees allowed us to sit down with the health insurance companies and negotiate rates downward, which will save our consumers more than $200 million in premiums,” according to Lee.
Another driving force behind the lower proposed rate increases for 2016 was the elimination of health plans that did not meet minimum essential coverage standards under the ACA, stabilizing the market and helping create a healthier pool of enrollees.
Covered California approved two new health insurance carriers for the upcoming enrollment, including an industry newcomer and established player. They are Oscar Health Plan of California, whose emerging technology platform has upped the ante for old-line insurers, and UnitedHealthcare Benefits Plan of California, whose parent company is the nation’s largest single health carrier.
Rounding out the list are Anthem Blue Cross of California, Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, L.A. Care Health Plan, Molina Healthcare, Sharp Health Plan, Valley Health Plan and Western Health Advantage.
The rates each of these insurers submitted are subject to a 60-day public comment period and independent reasonability review by the state’s regulators.