The cost of health insurance continues to climb in California.
Estimates released Thursday by Covered California, the state insurance marketplace, project that premiums in the individual market will rise 11 percent next year, while enrollment in the exchange — which is larger than any other state’s — will drop 12 percent.
A big reason is the elimination of a federal requirement to buy health insurance, which had been included in the Affordable Care Act of 2010 but was removed last year by the Republican-led Congress. The requirement, enforced by threat of a tax penalty, was designed to ensure that even healthy people bought insurance, thus bringing down the cost of care for everyone. Republicans saw it as onerous, and their repeal of the provision takes effect next year.
In California, more than 2.4 million people buy health plans in the individual market. That includes nearly 1.3 million people who receive Affordable Care Act federal subsidies to buy insurance through Covered California, and roughly 1.2 million who buy plans without subsidies — typically not through the exchange. People whose incomes are too high to qualify for subsidies will likely be hit harder, because they will have to absorb the higher costs on their own without financial assistance.
The projected 11 percent premium increase includes the expected rise in health care costs overall, which is about 6 percent each year. But these are just estimates: Final rates for 2019 will not be released until July, after Covered California finishes negotiations with insurance carriers. The estimated 11 percent increase is less drastic than those in some other states, such as Maryland, where insurers are requesting average premium hikes of 30 percent.
This year, Covered California rates were up 12.5 percent compared with 2017.
Nationally, in 2019, the uninsured rate is expected to reach 14 to 16 percent — up from the current 12 percent, according to an analysis also released Thursday by Covered California. This would increase the cost of providing care to uninsured people by between $1.5 billion and $7 billion in 2019 because more uninsured patients are expected to seek care at hospitals and other health providers. If those costs are shifted to private insurers, it would lead to a 2 to 4 percent increase in the cost of employer-sponsored health coverage, according to the analysis. That increase would probably be shared between the employer and the employee.
California’s uninsured rate is about 7 percent. In 2019, as a result of the mandate’s repeal, between 475,000 and 1 million fewer Californians will be insured, according to the analysis, which was done by PricewaterhouseCoopers for Covered California.
In California, the cost for uninsured patients is expected to grow by $420 million to $1 billion, according to the analysis.
Health policy experts anticipate that some people may not buy coverage next year if they are not required by law to get it. That would leave the remaining pool of customers on the exchange, who are likely to be older and sicker, with higher costs.
Aristeo Alvarez of San Jose said he is considering dropping his Covered California Blue Shield plan next year and instead signing up for a cheaper plan covering only emergencies, because he rarely needs to go to the doctor. Alvarez, 42, receives federal subsidies and pays about $270 a month in premiums.
“I don’t know what the cost is yet, but if it’s too high, then most likely I’ll look elsewhere for something else,” said Alvarez, who works at a jewelry store and drives part time for Uber.
Today, the emergency coverage — often called a “catastrophic plan” — does not meet the requirements under the Affordable Care Act, so people who buy such plans must pay a tax penalty. But starting in 2019, patients can buy these types of plans and not pay a penalty. Some people prefer lower-cost catastrophic plans if they rarely need routine medical care, but are covered in the event of emergencies. However, they typically have to pay for all medical care up to a certain amount, often several thousand dollars, before insurance kicks in.
Tiffany Lin, a 29-year-old freelance artist who has a Kaiser plan through Covered California, said she would continue buying the insurance just in case — even though she is relatively healthy. Lin pays just $1 each month in premiums because her income qualifies her for significant subsidies. But her co-pays are substantial: $100 for lab tests and $75 for doctors’ visits. Lin sometimes puts off lab workups and some medical visits, such as physical therapy appointments for her mild scoliosis, to save money.
“I would keep it, because I like the idea of still having a health provider, even though it’s been expensive,” said Lin, who lives in Cupertino. “I would hate that if anything did happen, I didn’t have anywhere to go and I’d have to pay even more out of pocket.”