Obamacare plans in California will cost 13.2 percent more on average next year if insurers follow through with their proposed rate increases, the state’s marketplace announced Tuesday.
Rates increased just 4 percent on average the last two years, but they will spike next year partially due to the end of a federal program designed to smooth insurer losses, Covered California Director Peter Lee told reporters Tuesday. With the announcement, California joins other states announcing that Obamacare customers probably will face big cost increases next year.
California’s two major marketplace insurers, Anthem and Blue Shield of California, are driving the cost increases, as they cover about half of the consumers. Anthem is requesting hikes of 16 percent on average and Blue Shield is requesting hikes of 19 percent on average, Lee said.
Trying to smooth the news, which dismayed consumer advocates in California, Lee stressed that rate hikes were also in the double-digits in the years before President Obama’s healthcare law started. They have averaged 7 percent each year for the last three years, lower than before the law.
More than 1.5 million Californians have bought plans on the marketplace. Lee urged them to shop around to find cheaper plans and said state regulators worked closely with insurers proposing the hikes.
“Covered California did deep dives with every one of the health plans, making sure the rates are the right rates, making sure premiums are only enough to cover healthcare costs, but enough to cover healthcare costs,” Lee said.
As more states announce their 2017 Obamacare rates, independent analysts are finding that premium costs are rising significantly faster than during the first few years of the healthcare law. That’s disconcerting to consumer advocates who worry about healthcare for low-income Americans and has fueled Republican accusations that the healthcare law isn’t improving access to care.
The consumer advocacy group Health Access California said state regulators ought to scrutinize the proposed rates to ensure they’re justified and expressed concerns about pending mergers among the largest insurers, which could hurt competition and drive up rates.
“While these rates hikes aren’t as bad as the annual double-digit increases before the Affordable Care Act, that’s not much comfort to consumers whose don’t see their paychecks increase by the same percentage,” the group’s director Anthony Wright said. “These rates show why California policymakers must continue to work to address the cost of care and coverage.”
Insurers can still choose to forgo the rate hikes, or downsize them, but state regulators can’t force them to. Lee also stressed that California has extra regulations on insurers to ensure consumers can visit the doctor several times and access urgent care without having to meet their plan’s deductible.
“For the vast majority of care, the deductible does not apply,” Lee said.
