Nearly nine in 10 Californians with a plan purchased through the state's health insurance exchange will see price increases of less than 8 percent next year, the exchange, Covered California, announced Thursday.
The weighted average rate across California will be 4.2 percent higher than this year. The new, estimated rate is calculated by factoring in increases and decreases, as well as the number of consumers in each health plan, according to a press release. The new premiums are preliminary, pending review by other state regulators. Ten health insurance companies will offer plans on the exchange, which is three fewer than this year.
"It's good news for California. It's good news for the Affordable Care Act," said Peter Lee, the executive director of Covered California. The 2015 increases are lower than annual hikes in the years before Obamacare, he said. "We've been seeing consumers facing 10 percent or more in rate increases year over year. This year, 4.2 percent is the average increase," Lee said.
Since the enactment of the Affordable Care Act, California has positioned itself as a national leader in health care reform. The state created its own health insurance exchange and participated in the law's expansion of Medicaid to more low-income residents. And California's uninsured rate was more than halved by the end of the first Obamacare enrollment period that ended this spring, as 3.4 million Californians gained coverage, according to the Henry J. Kaiser Family Foundation. Prior to Obamacare, California had one of the highest uninsured rates in the nation.
"We still are at the starting point, and we know we have a long way to go," Lee said.
The low average price increases for 2015 could quell fears of double-digit rate hikes in the state, but individual consumers' experiences will vary.
Thirteen percent of Covered California users are in health plans that will see price increases of more than 8 percent, and more than 35 percent of users will see rate hikes between 5 percent and 8 percent. Another 35 percent will pay less than 5 percent more, while 16 percent of policyholders have plans with prices that will stay roughly flat, or even decrease, according to Covered California. Average increases differ among the state's geographic areas and based on other factors, including age.
"Averages are meaningless. What's meaningful is to talk about a person's circumstances," Lee said. Consumers facing rate increases who shop around on the exchange during the next open enrollment period, which runs nationwide from Nov. 15 to Feb. 15, 2015, may find a comparable plan at a lower price, he said. Californians can review next year's rates for specific health insurance plans on the exchange's website as of today, he said.
These 2015 rate increases follow a significant one-time bump in prices for coverage on California's individual market last year. That increase was caused by Obamacare's benefit mandates and its prohibition against insurers rejecting consumers based on their health.
According to California Insurance Commissioner Dave Jones, prices rose anywhere from 22 percent to 88 percent from 2013 to 2014, although those rates don't factor in the effect of tax credits that reduce what customers pay. For 2014 benefits, 88 percent of Covered California users received such financial assistance. Jones supports a proposition pending on the ballot that would empower his office to reject insurance price increases, while Covered California's leadership has been skeptical. Lee on Thursday called Jones' findings "misleading and distracting."
California's health insurance premium increases appear in line with preliminary information coming from other states, although some consumers will face significant increases if they remain on their current plans next year. State and federal regulators are reviewing companies' proposed rates.