CA Insurance Commissioner: Insurers Fear Prop. 45, Will Keep Health Rates Low

A new analysis from the Department of Insurance confirms what has been reported since the Covered California exchange opened last October: Some people saw steep premium increases after the rollout of the Affordable Care Act.

According to the department's analysis non-subsidy eligible individuals saw average increases ranging from 22 to 88 percent, depending on their age and where they lived. The review was done of all health plans -- including those managed for the Department of Managed Health Care -- and looked at premiums from California's four largest carriers, Anthem Blue Cross, Kaiser, Blue Shield and Health Net.

The release appeared to be politically timed. Covered California's rates for next year are due on Thursday, and the rumble is that new premiums will show only modest increases.

Insurance Commissioner Dave Jones say that's for one reason -- Proposition 45 coming on this November's ballot. The ballot measure would give the state's insurance commissioner the authority to reject excessive health insurance rate hikes. Jones believes health insurers are keeping premiums lower than they would have otherwise without the threat of the proposition.

"I fully expect that the degree of those increases will be modest at best," Jones said, "because Proposition 45 is on the ballot, and they are very concerned about creating any sort of backlash from Californians."

UCLA health policy professor Gerald Kominski expressed no surprise at the news of the department of insurance's analysis and its report of increases in premiums. He said that the Affordable Care Act requires both standardized plans and guaranteed issue, meaning that no one can be turned down because of a preexisting condition. Those two factors alone, he said, account for higher premiums.

"In 2013, premiums were artificially lower, and prior to the ACA, premiums could be held down by excluding high-risk patients from the market and by offering skinny benefits."

The California Association of Health Plans, an industry group, chastised Jones for "looking backward" when open enrollment for 2015 is coming soon.

"The ACA ushered in a new era of health care coverage," said vice president Charles Bacchi in a release. "While some paid more for this expanded health care coverage, many Californians paid less and benefited from subsidies."

More than a million Californians qualified for subsidies in the 2014 open enrollment. Some non-subsidy eligible Californians saw premiums go down. Jones asserted that most of the three million people who purchased individual or small group insurance outside of Covered California (in other words, people who were not eligible for a subsidy) "got significant rate increases."

For its part, Covered California released a one-line statement in response to the department's analysis: "Covered California is looking forward to announcing its 2015 rates this Thursday."