Health insurance rate-setting map would raise costs, official says


A proposal to split California into six zones for setting health insurance rates would drive premiums up as much as 23% for some policyholders next year as part of the federal healthcare overhaul, the state insurance commissioner is warning.

These rating boundaries for the individual insurance market are among several items that state lawmakers are debating during a healthcare special session in Sacramento aimed at implementing the federal Affordable Care Act. In January, most Americans will be required to have health coverage or pay a penalty.

Under the proposal for six regions, the lnsurance Department estimates that premiums for similar coverage would increase as much as 22% in Los Angeles and 23% in the Bay Area.


Insurance Commissioner Dave Jones said he’s pushing for an 18-region plan that would cap increases at 8%. That and other alternatives are expected to be discussed at state hearings Wednesday.

Overall, many healthcare experts and consumer advocates have expressed concern about the affordability of premiums next year. Rates are expected to rise because the federal law requires improved benefits, and there will be new limits on how much insurers can vary rates based on age.

Now, state leaders are trying to determine what role geography will play in insurance rates. Health insurers currently set their own rating regions, but the federal law allows states to establish their own map.

“There is a lot of interest in doing this quickly,” Jones said. “It’s important to get it right as well so we can minimize any rate shock.”

A spokeswoman for state Sen. Ed Hernandez (D-West Covina), chairman of the Senate Health Committee, said the proposed legislation seeks to keep California in compliance with federal rules that recommend seven rating regions or fewer.

Two industry trade groups, the California Assn. of Health Plans and the Assn. of California Life & Health Insurance Cos., also oppose the six-region plan. Insurers favor a 19-region map that was adopted by state lawmakers last year for the small-employer health insurance market.


Jones has come out against the 19-region plan as well, saying rates could rise as much as 25% under that system.