Covered California announced Thursday that it expects to increase its health insurance premiums by a statewide average of 8.7 percent in 2019, double what it would have been if Congress had not dropped a tax penalty that encouraged U.S. citizens to maintain health insurance.
A state-run health-insurance marketplace, Covered California strives to offer consumers high-quality health insurance at the most affordable prices. Most Covered California plans, for instance, allow consumers to see their primary-care doctors without paying any deductible.
This year, about 1.2 million consumers are paying the whole cost of premiums for their Covered California policies, said Peter V. Lee, the executive director of the agency, and those are the people who will see their premiums rise an average of 8.7 percent to $550 a month, if they stick with their same plans.
For the roughly 1.1 million people who received a subsidy this year, their portion of premiums will grow by about 6 percent to $123 a month, on average, if they keep the same plans, Lee said.
“We know that’s a lot of money,” Lee said. “We know that it’s a struggle for many families who get subsidies and don’t get subsidies, but we also know that staying insured is the best bet, and we will be out there in 2019 promoting the reasons to have insurance, promoting the message that life can change in an instant and that it’s a bad gamble to go without insurance.”
In the four-county Sacramento region, premiums increases will average 8.8 percent. The region seeing the biggest average premium hikes, 16 percent, are Monterey, San Benito and Santa Cruz counties, according to a table provided by Covered California, whereas the region comprising Mono, Inyo and Imperial counties is the only one that will see an average premium cut: -0.5 percent.
Lee said that, by spending aggressively on marketing, roughly $100 million last year, Covered California has been able to maintain a healthy mix of enrollees. Price breaks for that healthy risk pool helped the agency to offset increases in premiums from a 7.5 percent jump in medical costs and the repeal of the so-called individual mandate.
The individual mandate, a component of 2010’s Affordable Care Act, required Americans to carry health-care coverage. If they didn’t, they faced a stiff tax penalty. The mandate was one way that the ACA attempted to ensure a healthy risk pool that would keep rates low, but last year, Congress repealed it in the Tax Cuts and Jobs Act.
The Congressional Budget Office predicted that premiums nationwide would climb 10 percent based on the repeal of the individual mandate alone, Lee said, but insurers working with Covered California reported that factor contributed only 3.5 percent, on average, to the 2019 rate increase. Heavy spending on marketing, Lee said, helped Covered California to achieve the healthy risk pool that the mandate was intended to assure.
“We spend a lot of time with our health plans, sharing the underlying, hard data both from (Medicare and Medicaid) and from the state of California that looks at the health status of the over 2 million Californians enrolled in the individual market,” Lee said. “We have just about the healthiest risk mix in the nation.”
He added that this pool of consumers and Covered California’s marketing commitment played a role in luring all 11 health insurers to continue offering health plans around the state. The vast majority of Californians have three or more health plans to choose from, Lee said, and 96 percent have at least two.
Consumers can reduce the average premium increases of 8.7 percent or 6 percent if they shop around, Lee said. By switching to the lowest-cost plan in each metal tier – bronze, silver or gold – enrollees could drop their average premium increase to as low as 0.7 percent, he said.
“This means that many Californians could pay the same rate as they do now in 2018 or even a little less if they want to shop and switch,” Lee said.
Despite Covered California’s marketing efforts, Lee said the agency expects roughly 250,000 people to choose to go without health-care coverage next year. Nearly 40 percent of those expected to drop coverage buy their Covered California policies through individual agents.
Xiomara Pena, the deputy director of the California office of Small Business Majority, said she’s concerned that many of those individuals may be self-employed business people whose incomes are just above the levels where they would qualify for subsidies. Hundreds of thousands of self-employed business people get their health care coverage through Covered California, Pena said, and roughly six in 10 ACA enrollees nationally are either small business owners or small business employees.
Long Beach resident Heather Altman said she is dismayed by congressional actions that are destabilizing the ACA exchanges. Because of Covered California, she said, she was able to launch her own business. Speaking during a news conference call organized by Health Access California, Altman said her insurance premiums had soared by 24 percent this year.
“I’m concerned with the way health care is going nationally,” said Altman, who said she must have health-care coverage because of her chronic asthma. “I don’t want to have to shutter my business because it is a successful business, but at the same time I also know I can’t continue to afford these costs.”
The environment for affordable care coverage gets even more challenging in future, Lee said, because the Trump Administration and Congress have approved short-term health insurance or association health plans that do not provide adequate coverage but that will be available at cut-rate prices.
If those plans siphon off more healthy consumers from the market, Lee said, it will mean large premium increases for middle-class Americans who buy insurance through ACA marketplaces and for the federal government which funds the subsidies for consumers with low incomes.