Health care premiums in 2015 are expected to rise 4.2% on average for Covered California, the nation’s largest state-run public exchange, and will be in line with most other price hikes.
The proposed rates suggest “a pleasantly moderate increase,” observes Michael Wolff, president of Dickerson Employee Benefits, a Los Angeles general agent appointed by Covered California to serve the small-group market. Dickerson also serves as a GA in the individual market for L.A. Care Health Plan and Molina Healthcare. “I think everybody was expecting, or fearing, higher rates,” he says.
A Citigroup analysis suggests Kaiser Permanente will actually lower its 2015 premiums by 1.4% to drum up more business. It also projects rate increases from Blue Shield of California at 6%, Health Net at 4.9% and Anthem Blue Cross, a division of WellPoint and largest carrier on California’s HIX, at 4.6%.
Assuming all of the proposed premiums are approved, a report published by Reuters noted that one-third of the state’s residents would pay up to 5% more than last year, the same number would pay 5% to 8% higher rates and 13% would pay 8% more, while 16% would see their rates either stay the same or decrease. There will be 10 health insurance carriers covering HIX enrollees in California next year, three fewer than in 2014.
As with many other states, pricing will vary across the Golden State. “Even within California, the rates are different,” Wolff explains, noting lower costs in the Central Valley vs. San Francisco.
Also See: Covered California Enrollees Might Drop Their Coverage
Andy Slavitt, principal deputy commissioner of the Centers for Medicare and Medicaid Services, recently told Congress that most HIX increases are projected in the mid-single digits, while PricewaterhouseCoopers is predicting an average increase of 7.5% for all the exchanges.
What’s happening with public exchanges is that they’re mirroring years of fairly steady price increases among employer-sponsored health plans, which have been at least in the 3% range, according to Cheryl Parcham, private insurance program director for FamiliesUSA.
The nonprofit research and advocacy group recently examined a dozen states whose proposed rates for 2015 were among the first to be made public. While premiums varied widely from one state to the next and even within states, they fell for at least one plan in nine of the states studied. One such example was Indiana, where the variation ranged from a 3% drop to 35% rise. California was not part of that initial study.
“In some states, there were insurers who were trying to gain market share, and so they set their premiums very low,” and in the process, drew younger and healthier customers, Parcham explains, while “others continued setting them high or at medium rates.”
She says the best part for consumers is that they have wider avenues across which to shop for coverage, especially if they’re eligible for premium assistance based on silver-plated plan designs.
Wolff sees innovation in the California market with regard to accountable care organizations and the electronic record requirements, especially among Blues plans, that “may have a dampening effect on price increases,” adding that other parts of the Affordable Care Act can complicate rate negotiations.
Also See: ACOs Make Inroads With Employers
He also reports quite a bit of interest in the SHOP exchange among California employers and has signed up more than 100 groups of less than 25 employees. “A lot of it hinges on the tax credits,” he says. Covered California’s SHOP exchange is competing with a private exchange model offered by CaliforniaChoice, which he says has an established track record over several years.
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