Buying health insurance through California exchange could cost you more next year

July 18--It could cost more to buy health insurance through Covered California for next year, but Californians likely will not see the steep premium increases facing consumers buying coverage through health exchanges in other states.

Covered California plans to announce proposed premium increases Tuesday morning at a news conference in Sacramento.

And central San Joaquin Valley consumers will be losing a health plan in 2017. United Healthcare, which entered the Covered California market in 2016, is leaving the exchange at the end of this year.

Competition among health plans -- the Valley has had four including United -- has helped keep down the costs that consumers have paid in monthly insurance premiums.

Nationwide, increases of as much as 60 percent have been projected for consumers shopping for health plans through the Affordable Care Act exchanges for 2017. But Californians shouldn't expect that kind of sticker shock, experts say.

"So far, it looks like single-digit increases," said Gordon Paul, a certified insurance agent who helps consumers enroll in Covered California health plans. However, health plans and the state have been "hush, hush" about increases, he said. "Sometimes you hear something and whether that's going to be the case is a different story."

Premium rates can vary by region, and Charles Bacchi, president and chief executive officer at the California Association of Health Plans, said last week he didn't know the final rates for health plans. Some could be up more than others, he said.

And regardless of an increase, about 90 percent of California consumers get federal subsidies that help pay the cost of insurance premiums, he said.

Californians have not experienced runaway premium increases since implementation of the Affordable Care Act in 2014. The state has been blessed with lower-than-historic levels of medical inflation of about 4 percent, Bacchi said. "This year, as we head into 2017, and we start planning for premiums, we're seeing a return to more historical growth," he said. Prior to the Affordable Care Act or Obamacare as it is still called, the growth was from 5 to 10 and 15 percent, he said.

Four factors are affecting the setting of premium rates in 2017, Bacchi said: increased spending on medical care, skyrocketing cost for prescription drugs, the phase-out of two federal programs designed to stabilize the insurance market, and enrollees gaming the system by signing up for coverage only when they need medical care.

Bill Wehrle, Kaiser Pemanente vice president health insurance exchanges, said in an email Monday that the health plan is "committed to offering stable rates over the long term."

Wehrle did not provide rates for 2017, but acknowledged factors that could increase them: "A greater and increasing use of services, changes in program and rules, higher costs of prescription drugs -- including new, high-cost specialty drugs -- have been realities all health plans have faced," he said.

According to the California Association of Health Plans, medical costs have increased as more people seek care, and prices for the care have increased. The price of hospital admission has increased 76 percent since 2004, the association said.

But the cost of prescription drugs is the fastest-growing segment of health-care spending. Prices for new drugs are astronomical, and in addition "drug companies are raising prices of existing drugs by two-to-threefold," Bacchi said.

The health plan association also cites the loss of two Affordable Care Act provisions for increasing premium rates.

The "reinsurance" and "sunset corridor" provisions of the Affordable Care Act are set to end this year. Both programs helped spread costs more evenly for health plans, Bacchi said. Estimates are nationally that the loss of the programs could increase premiums as much as five percent or greater, he said. "It creates some uncertainty for health plans moving forward."

A large number of Californians also are signing up for health plans outside of open enrollment, the set time each year for people to pick health plans for the coming year, Bacchi said.

Health plans are concerned people are "gaming the system" by waiting until they are sick and then citing a special circumstance to get coverage, he said. By law, every American is required to have health insurance, but people can buy coverage outside of open enrollment when there is a change in circumstances, such as a move, a marriage or divorce.

California does not require validation of a change in circumstance, Bacchi said. "We just need to make sure they all have legitimate enrollment qualifying events and that there's no funny business going on."

Barbara Anderson: 559-441-6310, @beehealthwriter

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