California’s Obamacare Rates to Average 4.2% Rise in 2015

Health-care plan premiums will rise an average of 4.2 percent next year in California’s insurance exchange, the largest Obamacare market in the U.S., state officials said.

The increase is considered low by officials at Covered California, the authority that runs the state’s exchange, who said many customers would see a decrease or no change. Californians saw premium increases this year, the first year plans were available under Covered California and other exchanges, that averaged as much as 88 percent, according to the state insurance department.

Premiums for health plans under the Patient Protection and Affordable Care Act loom as a key issue in 2014 congressional elections and are a practical concern for insurers. Large premium increases risk chasing off the healthy customers needed to balance the cost of covering the sick.

“We have changed the trend for health-care costs,” Peter Lee, the executive director of Covered California, said today at a news conference.

About 1.4 million people signed up for private plans in Covered California by mid-April, more than in any other state, according to the U.S. government. Ninety percent of those customers received subsidies to reduce their premium, Lee said.

The premiums for the four largest plans in the state increased this year an average of 22 percent to 88 percent compared with 2013, Dave Jones, the insurance commissioner, said July 29.

Plan Requirements

The 2014 plans were required for the first time to meet the Affordable Care Act known as Obamacare, which forced insurers to cover anyone regardless of their health, limited what they can charge older people and mandated a package of basic benefits including prescription drugs and maternity care. While those policies expanded access to insurance to people who previously would have been denied coverage or charged prohibitive prices, they generally increased premiums for healthy people, insurers say.

Jones is promoting a ballot initiative that would give him the power to reject insurers’ rate increases. Consumer Watchdog Campaign, an advocacy group that also supports the initiative, called Proposition 45, said insurers may have tempered their increases for 2015 in part because of the campaign.

“With health insurance companies facing Proposition 45’s accountability on the ballot, they agreed to much smaller rate hikes than those endured by consumers in 2014,” Jamie Court, president of the group, said in a statement.

Customer Pool

Lee disagreed, saying he believes insurers proposed low increases because the Covered California customer pool is attractive.

“They want to be priced to get enrollment,” he said. He called Jones’ report “misleading and distracting.”

Ten insurers will sell plans in Covered California next year, the authority said, including WellPoint Inc. (WLP) The Indianapolis-based company, the second-biggest U.S. health insurer, said on Twitter that its average increase in 2015 in California is a “modest” 5.8 percent.

“Extremely happy to be part of a sustainable & affordable exchange,” the company said in its tweet.

California rates vary widely among insurers and regions of the state. In Los Angeles County, for example, Kaiser Permanente will reduce its rates by as much as 9 percent, while WellPoint’s Anthem brand is raising rates as much as 11 percent, according to a report from Covered California.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Andrew Pollack, Drew Armstrong

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