Covered California announced Tuesday morning that it expects an average premium increase of 0.8 percent for 2020 in the state’s individual marketplace, the lowest such rate change since the health insurance exchange started business in 2013.
Peter V. Lee, the executive director of Covered California, attributed the low rate change to bills passed by the California Legislature and signed into law by Gov. Gavin Newsom over the past six months.
The legislation includes a so-called individual mandate that will impose a state tax penalty on any California resident who does not maintain health insurance coverage and offers state subsidies that will help an estimated 922,000 residents pay for insurance.
“The bold moves by Gov. Newsom and the Legislature will save Californians hundreds of millions of dollars in premiums and provide new financial assistance to middle-income Californians, which will help people get covered and stay covered,” Lee stated in a prepared news release. “California is building on the success of the Affordable Care Act and bringing quality care and coverage within reach for more people.”
He also noted that the legislative changes so improved insurer confidence that Anthem Blue Cross decided to return to offering coverage in much of the state.
The federal law, enacted in 2010, was a congressional attempt to bring affordable health care coverage to all Americans. Besides giving states the ability to create health marketplaces where insurers could compete to win consumers, the measure also protected patients from losing insurance because of pre-existing conditions and established minimum coverage provisions that all policies must offer.
However, the law has been challenged almost from the time it was passed, and Tuesday, California Attorney General Xavier Becerra will lead a coalition of 20 Democratic-controlled states in seeking to overturn a Texas judge’s ruling that the Patient Protection and Affordable Care Act is unconstitutional.
Judges in the U.S. Court of Appeals for the 5th Circuit are hearing arguments today from Becerra and the attorney general for Texas who is representing 18 Republican-led states that want the legislation overturned. U.S. Attorney General William Barr has said he will not defend the measure.
The Republican-controlled Congress gutted key components of the Affordable Care Act — doing away with the federal individual mandate, for instance, that gave a credit to taxpayers who bought insurance and penalized those who didn’t. And, the Trump administration has refused to reimburse insurers for the discounts that the law requires them to offer.
Those actions led to uncertainty in the marketplace and double-digit rate increases in the last two years. Covered California responded by allowing insurers to impose surcharges on the popular silver-tier policies to recoup the cost, and that staved off a mass exit of insurers.
Still, Anthem Blue Cross exited from offering insurance in many counties out of concerns about profitability. Now, Covered California announced Tuesday, Anthem plans to expand back into many areas of the state, meaning that virtually all Californians will have a choice of two insurers and 87 percent will have a choice of three.
“The fact that we have a major national plan re-entering major markets and that we’re ensuring virtually everyone across California has a choice in coverage is proof that, when you have a competitive market, it can work for both consumers and health plans,” Lee said.
Covered California officials estimate that the number of state residents getting insurance will increase by an estimated 229,000 people. The Golden State’s individual health marketplace now numbers roughly 2.2 million people, according to estimates from Covered California, and 1.39 million of those individuals buy their policies through the Sacramento-based health exchange.
The California subsidies will benefit roughly 235,000 state residents who do not qualify for premium assistance from the federal government because their income exceeds limits and 663,000 Californians who currently receive federal subsidies and will now also get a state one.
About 23,000 Californians whose annual income is just 138 percent of the federal poverty level — $17,237 for and individual and $35,534 for a family of four — will be able to get premiums of $1 per member per month.
“The winners of making coverage more affordable an once again requiring consumers to be insured are all 2.2 million people in the state’s individual market and Californians who benefit from having more of their friends, family and neighbors insured,” Lee said.
Covered California estimated that this year’s legislative changes resulted in premium decreases of 2-5 percent. The insurers’ proposed rates are subject to regulatory approval.