The average cost of California’s health care plans affiliated with the state-run marketplace are expected to rise by nearly 15 percent next year, insurance officials said Tuesday.
Covered California, the state’s official exchange, said the cost increase is largely behind the decisions of two major insurance providers to escalate rates for 2017.
Despite the anticipated spike, the agency said about 80 percent of consumers won’t notice much of a difference and some might even pay less if they shop for better rates and change plans. The substantial increase will be felt by those who keep the plans they have now, officials said.
“Shopping is going to be more important this year than ever before,” Covered California Executive Director Peter Lee said in a statement Tuesday. “Almost 80 percent of our consumers will either be able to pay less than they are paying now, or see their rates go up by no more than 5 percent, if they shop and buy the lowest-cost plan at their same benefit level. That’s the power of shopping.”
The statewide weighted average increase for 2017 will be 13.2 percent, the agency said. The cost increases for 2015 and 2015, by contrast, were about 4 percent.
California officials said that although rates will rise, government subsidies that help people cover the cost of health care will rise, as well.
“This is a new era of health care, where the consumer is in the driver’s seat with the power to look easily for a better deal, and where subsidies help absorb the impact of rate changes,” Lee said. “These options did not exist before the Affordable Care Act.”
Part of the reason for the substantial average rate increase is the decision by Anthem Blue Cross and Blue Shield of California, the state’s two largest insurers, are seeking premium increases by 17 and 20 percent, respectively.
“Some rate increases are necessary to cover the cost of care as more and more Californians use medical services that have become increasingly expensive each year,” Charles Bacchi, president of the California Association of Health Plans, said Tuesday. “As prices for hospitals, doctors, specialty drugs and other services keep climbing, we cannot lose focus on the need for affordability.”
Over the last three years, the average increase for premiums in California has been 7 percent — which officials said remains below the state’s rate trends before the ACA was passed.
Covered California said 11 insurance companies participate in the government-sponsored exchange and about 1.4 million Californians receive health coverage through the marketplace.