Capitol Alert

The go-to source for news on California policy and politics

California health exchange touts 4.2 percent increase in rates for 2015

07/31/2014 11:46 AM

07/31/2014 11:51 AM

California’s health insurance exchange officials announced Thursday that the average premium will increase an average 4.2 percent for the coming year, touting the lower-than-usual figure as evidence that the federal health care overhaul is making coverage affordable for millions of residents.

Covered California tentatively chose 10 health insurers to participate in the exchange and will open enrollment for the second time on Nov. 15. Under the new plans, 217,000 people will see their premiums remain steady or decrease while about 186,000 people will experience increases of more than 8 percent.

Despite the increase, Peter Lee, the executive director of Covered California, characterized the preliminary rates as a positive news for the state and the law.

“What it means is that we have a California health care market that is meeting consumers’ needs regardless of health status, regardless of ability to pay, because of what the Affordable Care Act does,” said Lee, noting that the rise in premiums is lower than the median 9.8 percent increase from 2011 through 2014. “We have changed the trend in health care costs, and for consumers we are making a huge impact.”

Beginning next year the exchange also is adding dental care for children as part of its standard benefits as well as making adult dental care available to enrollees.

About 1.4 million Californians, nearly 90 percent of whom were eligible for federal subsidies, enrolled in exchange plans during the first open-enrollment period. Another 1.9 million low-income residents qualified for Medi-Cal.

And a new survey found that 3.4 million people were able to become newly enrolled in coverage since the start of the new law.

Diana Dooley, secretary of the Health and Human Services Agency and chairwoman of the health exchange board, said the law has given California the tools “to begin a very long process of rationalizing” the delivery and pricing of health care. Dooley cited a study that found the state’s uninsured population has been reduced by half in the first year – from 22 percent to 11 percent. “We are taking incremental steps that are making lives better for so many people,” she said.

The rates vary based on individuals and where they live. About 35 percent of exchange customers will experience an increase of 5 percent or less and another 36 percent will see increases between 5 percent and 8 percent. The agency released a 170-page booklet describing market changes in every region of the state. It also unveiled a “shop-and-compare” tool that allows customers to plug in their information and preview their rates.

In greater Sacramento, where nearly 70,000 people signed up for coverage, the average lowest plan will decrease by about 2 percent while the average highest plan will jump nearly 17 percent. Officials said the figure on the high end would affect less than 100 people and that they would have several options to decrease costs.

Across most of the state, federal premium assistance will either rise or remain close to what it was this year. However, subsidies will fall in the San Joaquin region because average premiums there are decreasing.

Thursday’s announcement comes amid fierce campaigning over a ballot initiative advanced by Democratic Insurance Commissioner Dave Jones, Proposition 45, that would give his department regulatory authority over health insurance rates. On Tuesday, Jones released an analysis showing health insurance premiums increased sharply, from 22 percent to 88 percent, between 2013 and 2014.

At the same time, Jones predicted insurers would temper their proposed increases to avoid backlash from voters in the Nov. 4 election. On Thursday, Jones said that while health insurers “pushed the pause button” for 2015, his measure is still needed to prevent them from unjustly raising rates in later years.

“I think we have to recognize that there is no guarantee they will continue to do so,” Jones said.

Proposition 45’s chief proponents, Santa Monica-based Consumer Watchdog, issued a statement claiming credit for the modest rate increases.

“Health insurance companies know better than to spit in the eyes of voters before they decide whether to enact greater accountability for the industry,” Jamie Court said. “Health insurance companies need to face both the carrot of negotiation and the stick of regulation if consumers are not to continue to endure the double digit rate hikes that have plagued Californians for the last decade.”

Exchange officials disputed the findings of the Department of Insurance’s analysis and sought to draw attention to their ability to independently negotiate rates. The agency said its approach helped produce the lower rate increases while also maintaining high quality.

“It’s a clear sign that the system in place is working, and Covered California is making it possible for individuals to purchase quality health coverage at affordable rates,” said Charles Bacchi, executive vice president of the California Association of Health Plans.

Anthony Wright, executive director of the consumer advocacy coalition Health Access, said the rates and number of people insured so far provide a clear signal that the promise of health reform is being fulfilled. The efforts are making health insurance cheaper and easier than it would have been, he said.

Said Wright: “This is a rebuke to all the Obamacare naysayers and political opponents who predicted double-digit rate increases.”

Capitol Alert staff

Amy Chance
Political editor

Dan Smith
Capitol bureau chief

Jim Miller
California policy and politics
Capitol Alert editor

David Siders
Brown administration

Christopher Cadelago
California politics and health care

Jeremy B. White

Alexei Koseff
Insider Edition editor


Join the Discussion

The Sacramento Bee is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Terms of Service