Covered California Announces Double-Digit Rate Increases

The state’s health insurance exchange has announced an average 13.2 percent increase in insurance premiums next year amid soaring health care costs, a rise in specialty drug prices, and the end of mechanisms that kept rates down for the first two years of Obamacare. The figure is more than triple the 4 percent increase seen in the previous two years and is raising fears about the potential impact on California consumers, as well as the marketplace.

The state’s two largest insurers, Anthem Blue Cross and Blue Shield, will increase their rates even further by 17 percent and 20 percent respectively. Some regions will see even higher premium increases. The steepest rise (28.6 percent) will hit the counties of Monterey, San Benito and Santa Cruz, where limited competition has driven health care costs up even further. Northeast Los Angeles County will see an average uptick of 16.4 percent. San Francisco’s rates are expected to rise by an average of 14.8 percent.

Covered California was once the posterchild for how the Affordable Care Act should be run. But the latest announcement has raised serious concerns. Fewer people are enrolling than expected, while more services are being utilized. Across the country, companies have been dropping out of the exchanges, which are a centerpiece of the law. Consequently, in an op-ed for the Orange County Register, staff columnist Susan Shelley wonders whether we are witnessing the beginning of the so-called ‘death spiral.’

Covered California sells health plans to some 1.4 million people who don’t get coverage through work, Medicare or Medi-Cal. Those who receive subsidies will not be as heavily impacted by the increases.

Read more about Covered California’s recent announcement here.