State’s ACA rates to rise 12.5%

Next year’s pre­mi­ums re­flect un­cer­tainty over the fu­ture of Oba­macare. An­them is leav­ing some ar­eas.

Los Angeles Times - - BUSINESS - By Soumya Kar­la­mangla

Amid un­cer­tainty over the fu­ture of the Af­ford­able Care Act, Cal­i­for­nia of­fi­cials an­nounced Tues­day that monthly pre­mi­ums for health plans sold on the state’s Oba­macare ex­change will rise by an av­er­age of 12.5% next year.

Cov­ered Cal­i­for­nia, the state in­sur­ance mar­ket­place, pro­vides cov­er­age to about 1.5 mil­lion peo­ple, the ma­jor­ity of whom re­ceive sub­si­dies that lower their pre­mi­ums un­der the Af­ford­able Care Act.

In­sur­ance plans for next year will be avail­able for pur­chase in Cal­i­for­nia from Nov. 1 to Jan 31.

Next year, about 10% of peo­ple en­rolled through the ex­change will have to look for a new plan be­cause An­them Blue Cross will end its cov­er­age in most of the state.

State of­fi­cials said Tues­day that An­them will con­tinue pro­vid­ing cov­er­age only in Santa Clara County and parts of North­ern Cal­i­for­nia and the Cen­tral Val­ley.

The an­nounce­ment comes a week af­ter a Repub­li­can plan to un­wind key pieces of the Af­ford­able Care Act — also known as Oba­macare — failed in the U.S. Se­nate. Pres­i­dent Trump has re­peat­edly urged law­mak­ers to keep work­ing on a bill.

Those re­peal ef­forts, and Trump’s sug­ges­tions that he will not en­force the man­date that re­quires all Amer­i­cans to have in­sur­ance, could lower en­roll­ment this year, ex­perts say. Next year’s premium es­ti­mates prob­a­bly re­flect in­sur­ers’ fears that not enough peo­ple will sign up for in­sur­ance, or that only sick peo­ple will en­roll and their costs will be too high, ex­perts say.

“It’s not like we have a steady mar­ket. In fact, we have a mar­ket that’s in tur­moil be­cause of pol­i­tics,” said Gerald Komin­ski, di­rec­tor of the UCLA Cen­ter for Health Pol­icy Re­search.

Cor­lette, a re­search pro­fes­sor at Ge­orge­town Univer­sity’s Cen­ter on Health In­sur­ance Re­forms, said plan­ning for the ex­changes should’ve be­come more pre­dictable this com­ing year — the fifth since the ex­changes were cre­ated. That’s espe­cially true in Cal­i­for­nia, which has al­ways had one of the most sta­ble and com­pet­i­tive mar­kets, she said.

“In­stead they’ve had to deal with this crazi­ness from Wash­ing­ton,” Cor­lette said, “Cal­i­for­nia has stepped up to the plate.”

Cor­lette said she was sur­prised that Cal­i­for­nia’s av­er­age rate in­crease wasn’t higher than 12.5%, given that in­sur­ers across the coun­try have said they need to raise rates by at least 20% be­cause of the un­cer­tain fu­ture of the law. Cal­i­for­nia pre­mi­ums in­creased 13% this year, and less than 5% the two years be­fore that.

Cov­ered Cal­i­for­nia Ex­ec­u­tive Di­rec­tor Peter Lee said that in­creases in the cost of pro­vid­ing care were re­spon­si­ble for about 7 per­cent­age points of the state’s 12.5% av­er­age rate in­crease. An ad­di­tional 3 per­cent­age points, he said, re­flected a one-time tax ad­just­ment. But an­other 3 points, he said, ac­counts for in­sur­ers’ over­all un­ease with the on­go­ing de­bate over scrap­ping, or mas­sively mod­i­fy­ing, the Af­ford­able Care Act.

In ne­go­ti­at­ing with in­sur­ance com­pa­nies this spring, Cov­ered Cal­i­for­nia put to­gether a kind of hold-harm­less agree­ment. That agree­ment, which Cov­ered Cal­i­for­nia will take to its board this month, es­sen­tially agrees to let health in­sur­ers make up losses from un­ex­pected changes to the in­sur­ance mar­ket that may be caused this year or next by un­ex­pected changes in the fun­da­men­tals of the Oba­macare mar­ket.

Since he took of­fice, Trump has also threat­ened to end pay­ments that in­sur­ance com­pa­nies re­ceive to hold down out-of-pocket costs for lower-in­come con­sumers.

Cov­ered Cal­i­for­nia of­fi­cials said Tues­day that if those pay­ments to in­sur­ers are stopped, peo­ple who buy sil­ver-tier plans will have to pay an ex­tra sur­charge of 12.4% of their premium on av­er­age, of­fi­cials said Tues­macare day.

“A de­ci­sion by the fed­eral gov­ern­ment is needed in the next few weeks,” Lee said.

While An­them is pulling out of some re­gions, Os­car, Health Net and Blue Shield are mov­ing into new ar­eas. Lee said that 82% of con­sumers will still be able to choose from three or more health in­sur­ance com­pa­nies, and no county will be with­out a plan op­tion.

Ac­cord­ing to Cov­ered Cal­i­for­nia’s most re­cent en­roll­ment snap­shot from March, An­them cur­rently cov­ers about 252,560 ObaSab­rina cus­tomers, 61% of whom live in re­gions where the car­rier will pull out of the mar­ket.

That means 39,340 peo­ple in Los An­ge­les County, 19,490 in Orange County and 4,340 in San Diego County will be forced to find other op­tions dur­ing open en­roll­ment this fall.

Those num­bers do not in­clude peo­ple who have pur­chased An­them plans out­side of the ex­change. A Cov­ered Cal­i­for­nia spokesman said in an email that an ad­di­tional 150,000 An­them plans are es­ti­mated to be in place out­side the ex­change.

Lee said that the over­all rate in­crease for all shop­pers would’ve been even lower if plans did not have to start pay­ing a health in­sur­ance tax they’d been ex­empt from un­til now, which adds a 2.8% in­crease.

He also pointed out that all of the 11 health in­sur­ers cur­rently of­fer­ing plans on the ex­change will con­tinue to do so next year, even if in fewer mar­kets. The num­ber of com­pa­nies of­fer­ing plans varies from seven in Los An­ge­les County to only two in some ru­ral coun­ties such as Fresno and Kings.

The rate in­creases vary by re­gion. They will av­er­age 7% in San Fran­cisco County, 13% in Los An­ge­les and 10% in Orange County.

Lee said that since the health law went into ef­fect in 2014, the state’s unin­sured rate has dropped from 17% to 7%, “even in the face of huge head winds and un­cer­tainty.”

Mar­cus Yam Los An­ge­les Times

COV­ERED Cal­i­for­nia Ex­ec­u­tive Di­rec­tor Peter Lee, cen­ter, shown in Novem­ber 2015, says the 12.5% av­er­age rate in­crease re­flects higher costs of pro­vid­ing care, a one-time tax ad­just­ment and in­sur­ers’ over­all un­ease with the on­go­ing de­bate over the fu­ture of Oba­macare.

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