Defying an industry trend of double-digit rate hikes, California officials said the more than 1.2 million consumers in the state-run Obamacare insurance exchange can expect modest price increases of 4.2% on average next year.
On Thursday, Covered California announced the results of its negotiations with Anthem Blue Cross, Kaiser Permanente and other major insurers, an important yardstick for President Obama's Affordable Care Act.
"We have changed the trend in healthcare costs," said Peter Lee, Covered California's executive director. "This is good news for Californians."
Policyholders in some major urban areas will see increases slightly above the statewide average. San Francisco posted the highest average increase of 6.6%. Orange County wasn't far behind at 6.3%. The Los Angeles area was closer to 4%.
Consumers can see how their coverage would be affected by the new rates at Covered California's online rate calculator.
State officials and insurers credited the strong turnout during the first six-month enrollment window that ended in April for helping to keep 2015 rates in check. But others cautioned it's still too early to gauge the health law's impact, suggesting several factors may be temporarily holding rates down in the individual market.
"We don't really know what the real cost of Obamacare is yet because insurance companies are heavily subsidized for the first three years" of the law's implementation, said Robert Laszewski, a healthcare consultant in Virginia who has closely tracked the overhaul. "The insurance companies essentially can't lose money."
California Insurance Commissioner Dave Jones said the modest uptick in premiums was a positive sign, but he said insurers were likely motivated by a November ballot initiative, Proposition 45, that would give his office new authority to regulate health insurance rates.
"This is merely a pause in the double-digit rate increases we've seen historically," Jones said.
The rates released Thursday are still subject to review by state regulators. Open enrollment for 2015 begins in November.
While many consumers will see a small bump in premiums, others may experience far larger increases depending on where they live and the type of coverage they purchased. Affordability is a crucial factor for future enrollment and renewals.
Lee acknowledged that not all consumers would be spared from sizable increases, but he emphasized that people also have more freedom to shop around for a new plan under Obamacare.
Anthem Blue Cross said its rates were rising about 6% on average statewide. Rivals Blue Shield of California and Health Net Inc. reported a similar range of increases overall.
But Anthem's rates vary quite a bit across the state, with premiums going up as much as 14% in San Francisco and 16% for some restricted-coverage plans called exclusive-provider organizations sold in Los Angeles, state data show.
Kaiser Permanente made some of the most dramatic pricing moves with decreases in rates across much of Southern California. The HMO giant surprised many analysts last year with some of the highest premiums in the exchange and it had weaker enrollment as a result.
Even modest rate increases could be too much for some Californians to handle.
Cecilia Obeji, 58, said she didn't sign up for coverage on the exchange this year because she couldn't afford the $150-a-month cost. If prices go up, it will be even more difficult to afford, she said.
"The thing is — the money matters," said Obeji, who lives in Rancho Cucamonga.
What's more, many consumers are likely to continue to vent about the narrow doctor networks and other restrictions they often are forced to accept in exchange for lower rates under Obamacare.
A separate state investigation into consumer complaints about a lack of access to doctors and misleading provider lists is ongoing and may prompt further changes to these exchange plans.
Health insurers didn't back down, for the most part, from their smaller networks in year two. The companies have made some adjustments in response to the criticism from consumers and regulators.
Anthem Blue Cross said it has added 6,300 doctors since January to its network for individual policyholders in and outside the exchange. In the Bay Area, Blue Shield will give patients more flexibility to visit doctors and hospitals in neighboring counties.
Charles Bacchi, executive vice president of the California Assn. of Health Plans, said the smaller-than-expected increases show that insurers are committed to making the health law work.
The percentage of Californians without health insurance has been cut in half since the exchange opened, from 22% a year ago to 11% by early June, according to a recent survey by the Commonwealth Fund, a New York healthcare foundation.
The federal health law has suffered some legal setbacks in recent weeks, but the news on rates has been encouraging around the country thus far.
A recent study of nine states found that insurers wanted to raise premiums by an average of 8% for individual health plans, according to consulting firm Avalere Health. Insurers are seeking double-digit rate increases in some states.
Unlike most other states, California actively negotiates with insurers over rates and doesn't automatically allow every company to participate in its insurance marketplace. It also simplified the shopping process for consumers by setting standard copays, deductibles and other benefits for each level of coverage.
These same rates and health plans negotiated by Covered California are also available outside the exchange to hundreds of thousands of individuals and families purchasing their own coverage.
Only people wanting premium subsidies based on their income must purchase coverage through a government exchange. Nearly 90% of Covered California enrollees qualified for premium subsidies.
These rates don't apply to the majority of Californians who get their coverage through an employer.
Covered California has said about 1.2 million people enrolled and paid their premium during the initial sign-up period. That represented about 15% of the 8 million sign-ups nationwide.
Another 2 million people have qualified for an expansion of Medi-Cal, the state's Medicaid program for lower-income residents. That program remains open year-round, but many applicants have been stuck in limbo for months waiting for their eligibility to be confirmed by government officials.
Looming in the background of this year's rate negotiations was Proposition 45. The initiative on the statewide November ballot would grant the state insurance commissioner sweeping new powers over health insurance rate increases for individuals and small businesses. Today, state regulators can't block a rate hike that they deem excessive.
WellPoint Inc., Anthem Blue Cross' parent company, Kaiser and other insurers have contributed more than $25 million to defeat the ballot measure.
In 2010, Anthem infamously tried to raise rates by up to 39% in California. The national outrage that ensued helped Obama win passage of the Affordable Care Act.
Consumer Watchdog, the Santa Monica advocacy group pushing Proposition 45, said insurers held back this year to avoid that kind of voter backlash.
Jamie Court, president of the group, said "health insurance companies know better than to spit in the eyes of voters before they decide whether to enact greater accountability for the industry."
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