State officials announced Monday that the cost of health insurance premiums offered through Covered California, the state's insurance marketplace, will climb an average of 4 percent in 2016.
That's slightly lower than last year's average increase and it means the majority of the 1.3 million Californians who purchased plans through Covered California will have lower premiums or an increase of less than 5 percent if they keep their current plan, the agency said.
"This is half of what rate increases have been" before the Affordable Care Act, said Peter Lee, executive director of Covered California. "We now have three years of history showing that bringing focus on consumers and negotiating with health plans can lower premiums."
Last year's average premium increase was 4.2 percent, according to Covered California. It noted that the average 2016 increase for Southern California will be 1.8 percent.
The actual rate an individual consumer will pay will vary, depending upon the age of the enrollee; the type of plan a person buys; the region in which it's purchased and whether the consumer qualifies for subsidies.
"Headlines are great for summaries about what's going on around the state," said Dena Mendelsohn, staff attorney with Consumers Union. "But each consumer is only going to pay the premium that applies to them individually."
And that varies greatly within California’s 19 insurance pricing regions. For instance within the two regions that cover the County of Los Angeles , the percentage change in premium costs from this year to next ranges from a 13 percent drop in one Anthem plan to a 23 percent hike in one of Blue Shield's plans.
In Orange County, the shift in premium prices spanned a 10 percent decrease in one plan offered by Anthem to a 17 percent jump in one of Blue Shield's policies. Similar rate variables were found in Riverside and San Bernardino Counties as well, with Molina Healthcare showing a 7 percent drop in one plan and Blue Shield registering a 16 percent spike in another.
Consumers buying these plans will see the same increases or decreases regardless of whether they purchase through Covered California. Any insurer offering plans through Covered California must offer the same prices when it sells those same policies outside of the state marketplace. To qualify for federal subsidies provided through the Affordable Care Act, consumers must buy their plans through Covered California. Nearly 90 percent of those who bought polices through the exchange qualify for subsidies.
"Californians are now able to shop around, because they are not locked in to one plan or locked out of any because of pre-existing conditions—and if they shop they can save even more," said Beth Cappel, health policy advocate for Health Access California, in a statement prepared by the organization.
Several factors kept the average statewide rate increase low, including a data analysis that showed "our mix of young and ethnically diverse enrollees are among the healthiest in the country," said Covered California. "Health plans responded by lowering their rates."
Overall, the lower rates will save consumers "more than $200 million in premiums," said Lee.
Among the more notable changes enrollees will see in 2016: price caps on specialty drugs that will range from $150 a month for high-end platinum plans to $500 dollars a month for lower-priced bronze plans.
Covered California has allowed two more insurers to sell policies through the marketplace: UnitedHealthcare Benefits Plan of California and Oscar Health Plan of California. UnitedHealthcare, the largest health carrier in the U.S., will not offer plans in Southern California. Oscar Health will be available in Orange County and part of L.A. County, according to Covered California, which noted that Oscar will include UCLA in its provider network.
Here are the 12 firms that will sell 2016 individual and family plans through Covered California:
- Anthem Blue Cross
- Blue Shield
- Chinese Community Health Plan
- Health Net
- Kaiser Permanente
- LA Care Health Plan
- Molina Health Plan
- Oscar Health Plan of California
- Sharp Health Care
- Valley Health Care
- Western Health Advantage
- UnitedHealthcare Benefits Plan of California
Consumers will be able to review the various policies through Covered California's website beginning the week of Aug. 3, the agency said, adding that the "Shop and Compare Tool" will show the different plans and products available in 19 regions statewide, and provide "a preliminary estimate of costs and premium assistance."
There is a 60-day public comment for the new rates, during which time the California Department of Managed Health Care and the California Department of Insurance will review them. Consumers Union encourages consumers to submit their comments to the regulators, said Mendelsohn.
The next open enrollment period - when consumers can renew their plans or switch plans - begins on Nov. 1, 2015 and ends on January 31, 2016.
This story was updated to remove the reference to the Department of Managed Health Care and California Department of Insurance not being able to reject the new rates. These agencies are able to reject rates in certain circumstances.