California Health Insurance Exchange Keeps Rate Hikes Low — Again

Monthly premiums for California's 1.3 million Covered California customers will rise a modest 4 percent, on average, officials with the agency said Monday. This increase is slightly less than last year's increase of 4.2 percent for consumers who bought policies on the state's health insurance marketplace.

Some consumers could even achieve a reduction in their premium, of an average of 4.5 percent, if they choose to shop around.

"This is another year of good news for California's consumers and further evidence that the Affordable Care Act is working," said Peter Lee, Covered California's executive director.

Consumers who live in different parts of the state will see varying rates. In Southern California, consumers who stay in their plan will see an increase of just 1.8 percent, or an average of $296 per month. But in Northern California, where health care costs are typically higher, because of greater consolidation among doctors and hospitals, the increase is an average of 7 percent monthly, or $384.

Lee stressed that shopping around could help consumers save money.

"Health care is also local," he said. "Where you live frames what your options are. If you live in Los Angeles and you shop around, you could see your premiums go down 11 percent."

Betsy Imholz, an attorney and advocate with Consumers Union, called the average increase "terrific," and also encouraged people to shop on price. "Often you can get a lower rate by moving to another carrier," she said.

Lee said Covered California spent weeks negotiating with insurers.

"We've created a market where the consumer drives what's working in California," he said. "Throughout our negotiations, consumers in California saved more than $200 million."

Larry Levitt, senior vice president of the nonpartisan Kaiser Family Foundation, was positive about what he called "modest" increases. "This shows what a stable, competitive individual insurance market can look like," he said, via email.

In part, Levitt credited the cost-containment to Covered California's "substantial enrollment so far." It's a sign, he said, that the marketplace is likely attracting healthy people to help spread the risk of the sicker people.

Levitt also said the state agency's active role has helped keep premium increases down. "I think a key element of California's success is the standardization of insurance policies," he said, "which simplifies the choices for consumers and focuses competition squarely on premiums."

Covered California also announced that two new insurers will join the marketplace. UnitedHealthcare, the largest health insurer in the nation, will now offer plans in parts of the state, including the group of counties that start north of Sacramento and stretch to the Oregon and Nevada borders. Where some people had a choice of only one plan, now they will have two or three.

"Covered California did the right thing by targeting the new additions to the places where more choice is needed," Imholz said.

Under the UnitedHealthcare plan, people who live near the Oregon and Nevada borders will also be able to cross state lines to see a doctor, a practice that was often prohibited in other plans.

"Sometimes people were driving many hours in order to get care," said Beth Capell, who is with the advocacy group Health Access. People who live in Susanville, for example, were accustomed to getting care in nearby Reno, Nevada. But through Covered California intially, they had to drive several hours to Sacramento.

"They will now have the choice of another carrier that will be offering them coverage beyond the borders of California."

Parts of Los Angeles County and Orange County will see a new insurer — Oscar Health Plan of California, which currently sells insurance only in the two states of New York and New Jersey.

Lee said that the new additions to the marketplace were chosen because they have good networks and are good for consumers.

"Covered California does not think more plans are always better," he said. "In 2014 and 2015 we turned plans away. We're not adding plans just because they knock on our door."

In addition to the two new plans, all plans from last year were renewed for 2016: Anthem Blue Cross, Blue Shield, Chinese Community Health Plan, Health Net, Kaiser, Molina Healthcare, Sharp Health Plan, Valley Health Plan, LA Care Health Plan and Western Health Advantage.

The rates announced Monday are preliminary and will be reviewed by state regulators over the next 60 days.

This story was produced by State of Health, KQED's health blog.