California’s 2015 Obamacare Premiums Will Increase Modestly

Screenshot from CoveredCA.com, the website of Covered California.

Screen shot from CoveredCA.com, the website of Covered California.

Officials with Covered California, the state’s Obamacare marketplace, say premiums will go up an average 4.2 percent statewide in 2015 for the 1.4 million Californians currently enrolled in insurance through the exchange.

Peter Lee, executive director of the agency, was clearly delighted. “This is good news for Californians,” he said, “and an example of how Covered California and the Affordable Care Act are working to make health insurance affordable.”

Lee said premiums would vary by people’s age and where they live in California. Californians will have a choice of plans from the state’s four major insurers: Anthem Blue Cross, Blue Shield, Kaiser and Health Net — as well as six regional players: Chinese Community Health Plan, L.A. Care, Molina Healthcare, Sharp Health Care, Valley Health Care and Western Health Advantage.

Lee said that for the million-plus people currently insured through the exchange:

  • 16 percent: will see rates remain stable or go down
  • 35 percent: will see premiums increase 1-5 percent
  • 36 percent: will see increases of 5-8 percent
  • 13 percent: will see increases over 8 percent, some as high as 15 percent

UCLA health policy professor Gerald Kominski called the exchange’s single-digit increases after years of double-digit premium increases in California an “amazing achievement.”

“It sets a standard in the market and sends a message that excessive rate increases aren’t really justified.” 

Dave Jones, California’s insurance commissioner, is less enthusiastic. Jones is backing Proposition 45, a November ballot measure that would give the state’s insurance commissioner the authority to reject excessive health insurance premiums, a power he does not have now.

While Jones, a backer of the Affordable Care Act, admitted that “the news today is good,” he sees a political motivation behind these lower increases. “The health insurers have hit the pause button” on increases, he said in a press conference. He believes insurers have held their fire so as not to create a backlash from the California electorate — and enable the passage of Proposition 45.

“There’s no guarantee insurers will continue to” keep rate increases low without Prop. 45, Jones said. “That’s authority we still need.”

Peter Lee dismissed the idea that 2015 premiums are artificially low, saying that he had been involved in “deep actuarial reviews” with insurers and said that “the last thing we want is rebound rate hikes” in future years.

As part of the rate review process, regulators at the Department of Managed Health Care and Jones’ Department of Insurance will be reviewing rates in the coming weeks to ensure they are neither too high nor too low, Lee said. If premiums were set too low, an insurer might not have sufficient resources to cover the health care costs of its customers.

Jones confirmed that his staff would look at this issue, but said he “can’t imagine that these rates are inadequate.”

When rates were introduced last year, for Covered California’s opening year, many experts at that time said they were surprisingly low and thought it could be a “loss leader” strategy, Kominski said, to get people into the market and then “jack up prices” later.

“That didn’t happen,” Kominski said. “I don’t think the insurers are lying in wait, waiting to spring enormous increases on the public next year.”

Open enrollment for 2015 begins on Nov. 15. Covered California has opened its “Shop and Compare” tool for people who want to check prices now.

The benefits in the plans will be largely unchanged, although children’s dental benefits will be included in all Covered California plans next year. Adult dental will be offered at an additional cost.

 KQED health reporter April Dembosky contributed to this report.

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