Premiums for health insurance plans sold through the state marketplace will increase an average of 6% next year, Covered California officials announced last week.
This rate increase is the largest increase California has seen since 2019. In the past three years, insurers had kept average increases below 2%.
Rate changes vary by region — from an 11.7% increase in Imperial, Inyo and Mono counties to zero change in Fresno, Kings and Madera counties.
When premiums go up, an individual’s financial aid usually goes up as well. Aid is based on household income, so subsidies can offset some of the increase. But people who don’t qualify for subsidies will bear the full cost of the rate hike.
“The premiums are a capture of what health care costs are, how they vary across geographies and communities, how health care costs are rising over time, which we know in this country are already very high. high and growing,” said Jessica Altman, executive director of Covered California.
She noted that California’s rate increase is still lower than that of other states. A recent Kaiser Family Foundation analysis found an average 10% premium increase proposed by 72 insurers in 13 other states.
The increase in the rate, Altman said, is largely attributed to people resuming doctor visits and procedures they put off during the peak of the COVID-19 pandemic. There is also the cost of general inflation.
About one percent of the increase, however, is attributable to the potential loss of increased subsidies from the federal government, which will expire at the end of this year. Without the extra help, people will pay more for their premiums, likely prompting healthy young people to drop their coverage. And when healthy people leave the market, premiums go up for everyone.
The federal government’s American Rescue Plan last year gave California about $3 billion earmarked for two years of additional financial assistance through Covered California. The new law helped further reduce what people paid for their monthly premiums, prompting more people to sign up for health insurance. It also expanded who was eligible for savings to include middle-income individuals.
Currently 1.7 million Californians buy their coverage through the state marketplace. Covered California has estimated that if Congress does not renew the American Rescue Plan’s subsidies, about 1 million people will see their premiums double and about 220,000 will likely drop their coverage.
“(The rate increase) for the subsidized population is almost separate from what they pay out of pocket. What’s more important is what happens to the (US Rescue Plan) subsidies,” said Christine Eibner, a senior economist. for the RAND Corporation. think tank.
Altman said the sooner Congress acts, the better chance it has of avoiding consumer confusion in the fall. Covered California typically sends renewal notices to enrollees beginning in October, before the enrollment period, and having clarity for people by then is essential.
“There have been references both ways — ‘Is it going to be permanent? Is it going to be temporary? Is it going to stay in its current form?…Or are there going to be some tweaks to it?’ — and we really don’t know,” Altman said of the conversations taking place in Washington, DC
California’s 2022-2023 budget includes $304 million to enroll in the middle-class market that would begin if Congress does not renew aid. While helpful, it would not fill the hole left by the $1.7 billion in annual federal aid, Altman said.
Covered California also announced that another insurer, Aetna CVS Health, will join the state marketplace and be an option for people in El Dorado, Fresno, Kings, Madera, Placer, Sacramento and Yolo counties. Meanwhile, Anthem Blue Cross will expand into San Diego County.