Covered California says consumers will see lowest-ever premium hike for individual policies

Jul. 9--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."

Lee also noted that the legislative changes so improved insurer confidence that a major national insurer, Anthem Blue Cross, decided to return to offering coverage in much of the state.

After hearing news of the 0.8 percent increase, state Richard Pan, D-Sacramento, said: "That's less than inflation. Think about that."

Consumer advocate Anthony Wright with Health Access California hailed the 0.8 percent rate increase as proof that state policies defending and improving upon the ACA are working. Consumer advocates such as Wright had joined with academic experts and health insurers in pushing for the individual mandate and other changes that they said would allow make health insurance coverage more affordable.

"As a result of state actions, most Covered California enrollees will pay less for health insurance, as a lower percent of their income, than they do today, and many more will gain coverage that could not afford it before," Wright said. "More people with health coverage not only helps individuals and families better plan for their financial future, but also helps stabilize the market, lowering costs for everyone."

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 bipartisan coalition of 20 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 in New Orleans 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.

"If the Affordable Care Act were repealed, what would it mean?" Lee asked. "More than 20 million Americans would be at risk of losing their coverage. ...We would go back to the days of far more Californians without insurance. We'd go back to insurance companies being able to select who gets covered. We'd go back to the days of health benefit designs that meant consumers didn't know what they were getting when they signed up and might be at risk for not having coverage when they needed it."

Gov. Gavin Newsom, speaking at an event in midtown Sacramento, said the Trump administration's efforts to roll back the Obama-era law will cost them. Insurers raise rates when they have a smaller risk pool, and that means the federal government will pay higher subsidies for Americans getting coverage..

"If we don't have a diverse risk pool, everybody's premiums go up," Newsom said.

The Republican-controlled Congress gutted key components of the Affordable Care Act -- effectively 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 2017. 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 99.6 percent of Californians will have a choice of two insurers and 87 percent will have a choice of three.

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.

In a conference call with reporters, Lee said that, while no insurer is going to price their products in a way that would lose money, all 11 carriers know that consumers who have a choice will pick the best value.

"Consumers are in the driver's seat, and health plans know it," Lee said. "They did absolutely look at doing everything they could to have the most affordable products, and the 11 plans across California have made major investments in being the best products possible for California consumers. It's not a matter of Covered California pounding the table and saying, 'Lower rates.' It's rather the health plans seeing that,...if they don't have the lowest rates they can, they're not going to get enrollment."

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.

The Bee's Sophia Bollag contributed to this report.

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