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California Obamacare Rates To Rise 13% In 2017, More Than Three Time The Increase Of Last Two Years

LOS ANGELES TIMES
http://www.latimes.com/business/la-fi-covered-california-rates-20160718-snap-story.html

remiums 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 boasted that the program 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 expensive specialty drugs and the end of a mechanism that held down rates for the first three years of Obamacare.

Two of the state’s biggest insurers — Blue Shield of California and Anthem Inc. — asked for the biggest hikes.  Blue Shield’s premiums jumped by an average of more than 19%, according to officials, and Anthem’s rates rose by more than 16%.

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. Changing plans could also mean a new network of physicians, which could be disruptive to care for those with chronic conditions.

The rates vary significantly by region and insurer. Los Angeles and the rest of southwest Los Angeles County will see an average increase of almost 14%.

Blue Shield’s preferred provider organization rate in Los Angeles, chosen by 21% of those using the exchange, is increasing by an average of 19.5%. For a 40-year-old single person making between $17,820 and $23,760, choosing a “silver” level plan, the monthly rate currently is $122 monthly for that plan, while the government pays Blue Shield $196. Next year that same person would pay $170, while the government would chip in $211 a month.

“We’re paying more for less,” said Jamie Court, the president of Consumer Watchdog in Santa Monica.  “Insurers are limiting access to doctors and hospitals while also demanding a higher price.”

 

Horacio Chavez, 34, of Boyle Heights, said he made less than $25,000 last year as an education coordinator at a youth center. He currently pays a $100 premium for a Covered California plan that he uses for an annual check-up and a safety net in case of emergencies.

“I do want healthcare — I want the peace of mind that if anything happens to me that there’s some kind of coverage,” Chavez said. But “a 13% hike ... that’s going to affect people.”

He said he’s already barely making ends meet trying to also pay his rent, student loans from the University of Chicago, car payments and his health insurance premium.

“I’m already living check to check,” Chavez said.

Covered California officials defended the system Tuesday, saying that the competition between insurers offering coverage on the exchange was working to keep rates lower than they otherwise would be.

“California has a very competitive marketplace,” said Peter Lee, executive director of Covered California.

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.

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 federal healthcare.gov exchange provides insurance under the Affordable Care Act in 38 states. California and a few other states operate their own exchanges.

Around the country, several insurers, including giant UnitedHealth, have stopped selling health plans on the exchanges, and a number of new nonprofit health insurance coops have gone out of business.

Those decisions have fueled charges from the law’s critics that the law isn’t working.

Former Secretary of State Hillary Clinton, the presumptive Democratic presidential nominee, is pushing a number of specific steps to ease price pressure on consumers, including allowing Americans ages 55 to 64 to buy into Medicare.

Presumptive GOP presidential nominee Donald Trump has argued the health law should be repealed.

The health law's next enrollment period begins a week before Election Day.

Obamacare update: Still succeeding, repeal fading

The state and federal health insurance exchanges provide coverage to about 12 million people nationally, representing just a fraction of the nation’s total insurance market. The vast majority of Americans — more than 250 million people —– are in health plans purchased through an employer or provided by a government plan such as Medicare or Medicaid.

But the exchanges are a pillar of the Affordable Care Act’s program for guaranteeing Americans’ insurance coverage. And monthly premiums have become a closely watched barometer of how the law is performing.

Covered California’s Lee 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.

Lee added 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.

Mia Campitelli, a Blue Shield spokeswoman, said Tuesday that the insurer’s average 19.9% premium increase was “driven by our members using more healthcare services than we expected,” as well as the phase-out of federal mechanism that had kept rates down in the law’s early years.

Explained Anthem spokesman Darrel Ng: “Factors such as increased use of medical services and added costs of drugs and medical therapies put upward pressure on rates and underscore the additional work that needs to be done to moderate the growth in healthcare costs.” 

The financial pain for most Californians getting insurance through the exchange will be muted since 90% get taxpayer assistance to cover the premiums.

Americans making less than four times the federal poverty level — about $47,000 for a single adult or $97,000 for a family of four — qualify for the assistance.

Nonetheless, Americans who make too much to qualify for subsidies are likely to feel the brunt of the premium hikes. That will likely increase pressure on the new president — Democrat or Republican — to review the exchanges in 2017 for ways to make health plans more affordable.

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.

Though the Affordable Care Act 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 — the six-year-old law 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.

Soumya Karlamangla contributed reporting to this story.