California: 2015 Premiums to go up only 4.2% on WEIGHTED average!

This Just In... (emphasis added)

FOR IMMEDIATE RELEASE

Media Line: (916) 205-8403

July 31, 2014

COVERED CALIFORNIA ANNOUNCES RATES FOR 2015;

RIGOROUS NEGOTIATIONS WITH HEALTH INSURANCE COMPANIES KEEP RATE INCREASES LOW AND CHOICES ROBUST

Strong Enrollment for 2014 Prompts Balanced Risk Pool and Competition Between Health Plans; Average Statewide Rate Increase Kept to 4.2 Percent

SACRAMENTO, Calif. — The vast majority of Covered California consumers will see low increases in their health insurance premiums for 2015, and many consumers will see no increase or even a decrease. The statewide weighted average[*] came in at 4.2 percent, with some plans offering weighted average rates that are 8.5 percent lower than current pricing.

“This is good news for Californians and an example of how Covered California and the Affordable Care Act are working to make health insurance affordable,” said Covered California Executive Director Peter V. Lee. “As we move into our second open enrollment and first renewal for many Californians, we are glad to see consumers have a real choice, with affordable options in all regions.” 

Covered California’s role as an “active purchaser” brought in low rate increases while maintaining high quality. Covered California’s team of negotiators actively engaged in vigorous back-and-forth with insurance companies to keep increases at a minimum, deliver networks of doctors and hospitals that meet consumers’ needs and give them meaningful choice when shopping for the plan that is the best fit.

“Health care is regional, it’s local, and it’s personal. This means that the costs and options for each consumer in California are different,” Lee said. “The ‘average’ rate going up only 4.2 percent means that for some it will go up more and for some less, but all consumers now have the ability to shop. Consumers are not locked in to one plan; they can stay with their plan or change and can often find a lower-priced option.”

Covered California has selected 10 health insurance companies to be in the state health exchange in 2015. All 10 health insurance companies were in the exchange for 2014 and submitted bids to return to the exchange for 2015 coverage. The portfolio reflects a wide mix of large nonprofit and commercial leaders in the individual health insurance market, along with Medi-Cal and regional plans.

Covered California selected the following health insurance companies for the 2015 exchange:

•  Anthem Blue Cross of California.
• Blue Shield of California.
• Chinese Community Health Plan.
• Health Net.
• Kaiser Permanente.
• L.A. Care Health Plan.
• Molina Healthcare.
• Sharp Health Plan.
• Valley Health Plan.
• Western Health Advantage.

The rates submitted by the selected companies are tentative and subject to an independent reasonability review by the state’s regulators, with the California Department of Managed Health Care reviewing the rates of nine carriers and the California Department of Insurance reviewing the rates of one.

Additionally, 90 percent of consumers currently enrolled in health insurance plans through Covered California are receiving federal subsidies to help reduce their overall costs. In most areas of the state, the amount of subsidy that individuals receive will either increase or remain very close to 2014 subsidy amounts. This means that for many consumers, any increase in premium will be offset by an increase in subsidy.

All insurers submitted bids for products that include children’s dental plans, making it convenient and affordable for families to get dental care for their children.

In response to customer feedback, some health insurance plans will offer expanded provider networks so that Californians can choose from a wider selection of doctors.

The participating companies offer networks designed to meet the needs of consumers. In many cases health plans added doctors and hospitals to existing networks, in addition to providing essential health benefits such as prescription drug coverage and hospital stays. These benefits are identical for both consumers purchasing coverage through Covered California and consumers purchasing on the individual market outside the exchange.

Because of the Affordable Care Act, all health insurance companies in the individual market now offer guaranteed issue; no one is denied coverage because of a pre-existing condition. Consumers can select plans without worrying about gimmicks and gotchas that previously plagued the commercial market. Additionally, the law’s limits on out-of-pocket spending are helping Californians avoid financial ruin due to medical costs.

Consumers can now use the 2015 Shop and Compare Tool on the Covered California website, at www.CoveredCA.com/shopandcompare/#calculator, to look at plans and products in their area and to get a preliminary estimate of costs and premium assistance.

For more details on the plans in specific pricing regions, visit www.CoveredCA.com/PDFs/CC-health-plans-booklet-2015.pdf.

The current list of insurers is for comprehensive individual health policies only. Covered California will later announce adult and family dental options available through Covered California, along with health insurance options for small businesses.

About Covered California

Covered California is the state’s marketplace for the federal Patient Protection and Affordable Care Act. Covered California, in partnership with the California Department of Health Care Services, was charged with creating a new health insurance marketplace in which individuals and small businesses can get access to affordable health insurance plans. Covered California helps individuals determine whether they are eligible for premium assistance that is available on a sliding-scale basis to reduce insurance costs or whether they are eligible for low-cost or no-cost Medi-Cal. Consumers can then compare health insurance plans and choose the plan that works best for their health needs and budget. Small businesses can purchase competitively priced health insurance plans and offer their employees the ability to choose from an array of plans and may qualify for federal tax credits.

Covered California is an independent part of the state government whose job is to make the new market work for California’s consumers. It is overseen by a five-member board appointed by the governor and the Legislature. For more information on Covered California, please visit www.CoveredCA.com.

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[*] The weighted average is a blended rate that considers both the increase or decrease in rate and the number of consumers who will receive that rate change.

There's several important items to note in this press release. First, unlike most of the other "averages" given out by other states (including my own state of Michigan), CoveredCA has properly given the weighted average. As I noted in my Michigan entry, an unweighted average is kind of meaningless; consider 2 companies, one asking for a 1% increase and the other asking for a 20% increase. The unweighted average is 10.5%, but that doesn't mean much if the 2nd company has 95,000 enrollees and the first company only has 5,000. CoveredCA states that the 4.2% increase request is indeed weighted to take the varying enrollments for each company into account.

Secondly, again, remember that these are requested rate changes only; these aren't final. Under the ACA, they have to be reviewed and approved by state regulators. So far only two other states, Rhode Island and Connecticut, have released their approved rate changes...and in both cases the regulators slashed the increases down considerably. Again, you can ask for whatever you want, but under the ACA it's up to the state to determine how much you actually can get; this is a good thing.

In the case of California, it's very likely that these rates will indeed be the final ones; it comes directly from CoveredCA itself, the headline is pretty specific about these being the rates for 2015 and the PR notes the "rigorous negotiations", etc. Still, it's always possible that the final rates will still change slightly in the end...and 4.2% on (weighted) average isn't bad at all.

Third, there's another good thing here: At least some of the insurers are feeling the heat to expand their coverage networks, something which California in particular has had a lot of problems with during the first year of the ACA exchanges.

Overall this is good news all around, especially considering that this is California, which means 1) it covers almost 20% of all ACA exchange enrollees nationally and 2) CA is running their own exchange, so is completely impervious to any Halbig fallout even if it is upheld.

Too bad there's no updated enrollment or payment numbers for QHPs in the PR, though...