Covered California Looking at Huge Rate Hikes

Across the country, people who buy health insurance on exchanges could see their premiums rise between 12 and 32 percent in 2019, according to an analysis released Thursday by Covered California, the state exchange that sells insurance to 1.2 million residents who don’t receive health coverage through their employers.

Covered California did not break out 2019 projections for California. An analysis last month from the Urban Institute estimated that premiums in California will rise 18 percent in 2019.

“Consumers will see a premium increase show up on notices in September and October for their January 2019 premium,” said Peter Lee, executive director of Covered California.

Prices for insurance will continue to rise after that, Covered California’s analysis predicts. California is among 15 states that are expected to see premiums jump 35 percent by 2021, compared with current rates. Nineteen states could see premium hikes of 50 percent. And 17 states could see a whopping 90 percent increase in insurance premiums.

These rate increases apply to the roughly 10 million Americans who receive federal subsidies to help pay for premiums, as well as the 6 million who do not. The former group may be sheltered somewhat from the price increases because their subsidies should go up as well; the latter group will be hit harder because they earn too much to qualify for this financial assistance.

States like California that have a large number of people enrolled in insurance in the individual market, and a relatively healthy risk pool, are more likely to be in the lower range of the impending increases. California has one of the lowest percentages of people with chronic conditions in its exchange because overall enrollment, including healthy people, is higher than that of most states.

Since 2014, the year Covered California began, insurance premiums rose an average of 4 percent in each of the first two years, 13 percent in 2017 and 12.5 percent in 2018.

The predicted increases are driven by the rising cost of medical care, paired with actions taken by Congress and the White House since 2017 that have injected uncertainty in the insurance market. The individual mandate, the requirement under the Affordable Care Act to buy insurance or pay a tax penalty, will no longer be in effect starting in 2019 because Congress repealed the mandate as part of a tax bill passed in December. The elimination of the mandate will drive premiums up between 7 and 15 percent in 2019, according to Covered California’s chief actuary John Bertko, who wrote the analysis. The underlying medical trend rate accounts for another 7 percent increase each year.

The Trump administration has also loosened regulations around the sale of cheaper, less comprehensive insurance plans. Experts predict this will separate the individual market into two pools: healthy people who will gravitate toward the less expensive, less comprehensive plans, and sick people who will be left paying costlier premiums because they need more protective plans.

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