Amid turbulence over the future of federal health-care reform, consumers buying insurance in Tulare, Mariposa and Merced counties will see a rate increase for monthly premiums of 24 percent on average in 2018 – nearly twice the statewide hike.
In Fresno, Kings and Madera counties, the rate increase is much lower – 4.7 percent – but about 30 percent of consumers will have to find a new plan since Anthem Blue Cross will not be offering coverage in those counties next year.
Insurance premiums are increasing 12.5 statewide on average. While Anthem is pulling out of 16 of 19 Covered California regions, including Region 11 in the central San Joaquin Valley, the state will again have 11 plans through the insurance exchange.
This is the second year for the state to have double-digit increases in premiums. In the central San Joaquin Valley, rates rose from 8.4 percent to 10.8 percent on average this year. Statewide, the rates increased 13.2 percent on average in 2017. Covered California attributed some of the increase this year to the phase-out of two federal programs designed to stabilize the insurance market.
Uncertainty over the future of the Affordable Care Act will account for about 3 percent of the statewide increase in 2018, said Peter V. Lee, executive director of Covered California, the state’s health insurance exchange created for the Affordable Care Act, also known as Obamacare. California also got two sets of premium rates from insurers for 2018 because of the uncertainty.
And Lee said Tuesday that lower-income consumers could face a 12.5 percent surcharge if the federal government does not fund cost-sharing subsidies.
Covered California will need to make a decision about imposing the surcharge by the end of this month. Lee said he has relayed the urgency for the Trump administration to make a decision about subsidies in a letter to to Tom Price, secretary of Health and Human Services, and Seema Verma. administrator of the Centers for Medicare & Medicaid Services.
Lee said Trump needs to provide clear guidance. “A Tweet would not be enough. This needs to be a statement between Congress and the White House that there is certainty through 2018,” he said.
“We do not want to implement this workaround. It will cause a lot of confusion,” Lee said.
Dave Jones, California’s insurance commissioner, vowed Tuesday to sue the Trump administration if it withholds the subsidy payments under the Affordable Care Act.
“California is not immune to the undermining actions that President Trump is taking against the Affordable Care Act,” Jones said. “In the event the funds are cut, either through presidential action or congressional inaction, we’ll have these higher insurance rates and I’ll take the action to challenge,” Jones said. “Our standing to bring that suit is California’s consumers are being impacted by the failure to make those cost-sharing reduction payments.”
Statewide, about 48 percent of the 1.4 million Covered California consumers benefit from the cost-sharing reductions that help pay for deductibles and co-payments for a silver plan purchased on the exchange.
The subsidies currently are being paid month by month. Republicans in the House of Representatives filed suit in 2014 saying the payments were unlawful because Congress had not approved the funds, and a federal judge in 2016 agreed. The Obama administration appealed and no final decision has been reached, but Trump has threatened to withhold the subsidies in light of the GOP’s failure to repeal and replace Obamacare.
Tax credits ease pain
Lee said most lower-income consumers who purchase a silver plan will not see the full effect of the 12.5 percent surcharge because they receive a tax credit that offsets the cost of their monthly premiums. About 87 percent of the people buying Covered California plans get the financial assistance, he said. In the Valley, 93 percent of the consumers get the financial help to pay premiums.
Covered California has worked with health plans to try and keep them in the state, Lee said. The exchange board will consider a plan later this month to allow insurance companies to make up for losses in 2018 that could be associated with the loss of the cost-sharing subsidies or with lack of enforcement of the individual mandate that requires people to have insurance or pay a tax penalty. “This allows health plans to stay in the market where they might have left otherwise,” Lee said. “And more than that, we are helping give them tools to price as low as possible in 2018, meaning we’re going to get better enrollment in 2018.”
The exchange will spend $106 million in marketing to encourage people to enroll, Lee said. Insurance companies need a healthy mix of well enrollees to offset sickly ones.
“Marketing is an investment,” Lee said. “If you don’t sell insurance, those who knock on your door are sick people,” he said.
Covered California gets praise from Anthony Wright, executive director of Health Access California, an advocacy group. “Despite the Trump administration’s attempts to sabotage and undermine the Affordable Care Act, California continues to have a stable individual market. All 11 insurers are staying in the marketplace and subsidies will continue to ensure that 86 percent of the 1.4 million in Covered California will not have to pay more than a percentage of their income for a silver plan,” Wright said.
Lee said consumers need to shop for the best health plan. Some can limit their rate increases to an average of 3.3 percent if they shop wisely
Rate increases vary widely by plan in the central San Joaquin Valley. For example, in Tulare, Mariposa and Tulare counties, Anthem is offering a product, but rates for it will increase from 15 to 48 percent. Health Net and Kaiser Permanente offer a plan and Blue Shield of California offers two plans. Proposed rate increases range from 8 to 24 percent for a Blue Shield plan, 14 percent for Health Net and 3 to 7 percent for Kaiser.
In Fresno, Kings and Madera counties, where rate increases are much lower overall, consumers have only two choices: Blue Shield or Kaiser plan. Blue Shield could have rate increases up to 13 percent and Kaiser’s increases range from 3 to 7 percent.
Blue Shield said underlying costs of health care continue to rise, but it caps net revenue at 2 percent. “Rates for members who buy insurance through Covered California will increase an average of 18.2 percent for 2018,” the company said in a written statement. If the federal government decides to stop payments for cost-sharing reductions, rates for members on silver plans would increase an additional 8.3 percent, Blue Shield said.
2018 health insurance rate increases
Fresno, Kings, Madera counties
Regional rate change: 4.7 percent
Lowest price bronze plan: 7.5 percent
Lowest-price silver plan: 7.5 percent
Lowest-price silver plan with surcharge: 16.5 percent
Switch to lowest-price plan in same metal tier: 3.9 percent
Mariposa, Merced, Tulare counties
Regional rate change: 24 percent
Lowest-price bronze plan: 15.0 percent
Lowest-price silver plan: 6.7 percent
Lowest-price silver plan with surcharge: 22 percent
Switch to lowest-price plan in same metal tier: 13.5 percent
Source: Covered California