Premiums for Obamacare plans in California are expected to rise less than 1% in 2020, a mild increase that officials credit with changes the state made to its healthcare provisions.
State officials announced the rate increases Tuesday ahead of a court challenge Obamacare faced in New Orleans in which Republican state officials planned to argue that the law needs to be thrown out. California has been supportive of Obamacare and has expanded it: Democratic Gov. Gavin Newsom signed a bill into law in June that expands financial help for premiums for more people and adds a penalty on the uninsured.
Premium increases for Obamacare plans have been difficult for many of the law’s customers, who have been unable to keep up with higher costs and have been siphoned out of the market.
Premiums had increased in California by an average of 7.9% a year since 2014, but that trend appears to be leveling off in 2020. Preliminary data show premiums will rise by an average 0.8%. That’s the lowest that the state’s Obamacare marketplace, called Covered California, has seen since the plans took effect in 2014.
Further, all 11 health insurers who sold Obamacare plans in California for 2019 are returning in 2020, and Anthem Blue Cross will expand to more counties.
Peter Lee, the executive director of Covered California, called the preliminary rates a “huge win for Californians” in a phone call with reporters Tuesday, and said that the results underscored that states have the opportunity to go beyond Obamacare. He encouraged other states, and even Congress, to take similar action.
In 2020, an estimated 922,000 Californians are expected to pay less for their health insurance coverage if they buy it through Covered California. This will occur as a result of a bill Newsom signed into law in June that would allow people to receive subsidies to pay for coverage if they make up 600% of the federal poverty level, or roughly $75,000 a year for an individual.
Previously, people could only get help to pay for coverage if they made up to 400% of the federal poverty level, the rate that is set under Obamacare nationally.
State lawmakers also reinstated an unpopular part of Obamacare, which fines people if they do not obtain health insurance. The uninsured will pay a penalty of $695 per adult or 2.5% of their income, whichever is higher, if they don’t have coverage in 2020. The penalty will go toward paying for the Obamacare expansion state lawmakers passed.
“You need to have health insurance in California, it’s the law,” Lee said. “If you don’t, there’s a penalty.”
State officials credit the changes with lowering premiums from what they would have been by between 2% and 5% for next year, but other states that did not implement California’s changes are also expecting a similar leveling out of premiums. In 2019, most of the country already saw a reduction in premiums, which was a first.
Still, it’s clear what individuals pay for coverage will go down because the state government is kicking in new help.
For example, an estimated 235,000 middle-income Californians who previously did not qualify for financial help will be eligible to receive an average of $172 per household per month, which will help them save an average of 23% off their current premiums. An estimated 663,000 people who already get help are going to also see a reduction of roughly 5% a month in their premiums.
What Obamacare customers ultimately pay for coverage depends on how much financial help they get, where they live, whether they smoke, and how old they are.
Currently, 1.39 million people sign up for coverage through Covered California and another 800,000 purchase coverage directly from an insurer. Both of these customers are part of what is known as the “individual market,” the group of people who buy coverage on their own because they don’t get it through a job or a government program. Many of these individuals are self-employed or work for a small business.
State officials plan again to spend $110 million on marketing and outreach about the law. The amount trumps what the federal government pays to market the law in most states. The Centers for Medicare and Medicaid Services spends about $10 million for marketing its exchange, called healthcare.gov, which is the website most states use, and another $10 million on navigators that help people sign up for coverage.
