Santa Monica, CA – Consumers should review new health insurance policies closely for “hidden premiums,” including narrow provider networks, high deductibles and climbing cost-sharing that can result in major unexpected medical bills, Consumer Watchdog said today.
Health insurance rates released by Covered California today increased an average 4 percent for 2016, similar to projected rate increases reported by the Kaiser Family Foundation in major metropolitan areas around the country.
Insurance regulators in other states have the power to reduce these proposed rate increases before they are final, if a review finds they are unjustified, but regulators in California do not have that authority.
A recent Kaiser Family Foundation survey showed that 44 percent of Covered California policyholders already have difficulty paying health insurance premiums, while the Urban Institute found that, among insured adults, those with higher deductibles also have more problems paying medical bills.
“On top of an increased sticker price, consumers should watch out for the ‘hidden premium’ owed if they use their coverage and face thousands of dollars in high deductibles, or unlimited out of pocket costs when shrinking narrow networks force them to see out of network providers,” said Carmen Balber, executive director of Consumer Watchdog.
Many consumers have discovered they are responsible for large medical bills after determining a provider is in network, only to be told after the fact they are not covered. Covered California today said it has encouraged insurance companies to create these “skinny” provider networks.
As premiums and cost-sharing increase, health insurance company profits are also rising. Anthem’s profits have surged, with $2.6 billion in 2014 and a prediction of record profits in 2015. Blue Shield of California reported a profit of $162 million in 2014, and has $4 billion in reserves. Kaiser’s profits jumped 15 percent in 2014 to $3.1 billion. Health Net had a profit of $145.6 million in 2014, and total revenues for the first quarter in 2015 increased 28% from a year ago.
Anthem and Blue Shield signed up an estimated 57 percent of Covered California’s market this year. Overall, they, along with Kaiser Permanente and the smaller Health Net, cornered 94 percent of the market.
While Covered California today encouraged consumers to shop around, it also limited competition by restricting the markets in which new entrant UnitedHealth Group can sell coverage so it could not “undercut” its competitors.
“It’s a genuine mystery why Covered California would protect the state’s three health insurance giants from competition from their biggest rival,” said Balber.
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