On Thursday, Covered California officials announced that the average premium for health plans offered on the exchange will increase an average of 4.2% for the coming year, the Sacramento Bee reports (Cadelago, Sacramento Bee, 7/31).

Covered California is the state's health insurance exchange, created under the Affordable Care Act.

The rates will be reviewed by state regulators before being implemented officially (Robertson, Sacramento Business Journal, 7/31). 

Background

The exchange's next open enrollment period will begin Nov. 15 and run until Feb. 15, 2015.

Covered California will aim to garner new enrollees and renew coverage for many of the 1.4 million individuals who signed up during the first open enrollment period (California Healthline, 7/29).

Details of Rates

For 2015, exchange plan premiums will be a weighted average of 4.2% higher. However, officials said the average premiums for some plans would decrease by 8.5% from current rates (Covered California release, 7/31).

The rates vary depending on region, but most will see slight increases:

• In Alameda County, the weighted average increase is 2.8%;
• In Contra Costa County, the weighted average increase is 3.8%;
• In Fresno, Kings and Madera counties, the average weighted increase is 3%;
• In Kern County, the weighted average increase is 4.5%;
• In Los Angeles County, which includes two pricing regions, the weighted average increases are 4.4% and 4.3%;
• In Northern California, the weighted average increase for premiums is 4.7%;
• In Marin, Napa, Solano and Sonoma counties, the weighted average increase is 5.4%;
• In Mono, Inyo and Imperial counties, the weighted average increase is 3.8%;
• In Monterey, San Benito and Santa Cruz counties, the weighted average increase is 2.9%;
• In Orange County, the weighted average increase is 6.3%;
• In the Sacramento area, the weighted average increase is 3.7%;
• In San Bernardino and Riverside counties, the weighted average increase is 4.5%;
• In San Diego County, the weighted average increase is 5.8%;
• In San Francisco County, the weighted average increase is 6.6%;
• In San Luis Obispo, Santa Barbara and Ventura counties, the weighted average increase is 5.1%;
• In San Mateo County, the weighted average increase is 3.7%; and
• In Santa Clara County, the weighted average increase is 1%.

Average premium rates will decline in only one area. In San Joaquin, Stanislaus, Merced, Mariposa and Tulare counties, the weighted average decrease will be 1.9% (Covered California report, 7/31).

Covered California Executive Director Peter Lee said several factors kept the rate increases across the state low, including:

• A larger-than-predicted number of sign-ups during the first open enrollment period;
• A surge in healthier individuals signing up for health plans at the end of the first open enrollment period; and
• The ACA's medical-loss ratio rule, which requires insurers to dedicate at least 80% of premiums to health care costs (Perkes, Orange County Register, 7/31).

Meanwhile, officials said that subsidies for 2015 are likely to remain the same or be slightly higher than what was offered in 2014, which could offset premium increases for some consumers.

Insurers Participating in the Exchange

All 10 insurers that participated in the state exchange during its first open enrollment period submitted bids and were approved to return in 2015, including:

• Anthem Blue Cross of California;
• Blue Shield of California;
• Chinese Community Health Plan;
• Health Net;
• Kaiser Permanente;
• L.A. Care Health Plan;
• Molina Healthcare;
• Sharp Health Plan;
• Valley Health Plan; and
• Western Health Advantage (Covered California release, 7/31).

Reaction

Charles Bacchi, executive vice president of the California Association of Health Plans, said the rates are "a clear sign that the system in place is working and Covered California is making it possible for individuals to purchase quality health coverage at affordable rates."

Anthony Wright, executive director of Health Access, said the rate announcement "is a rebuke to all the Obamacare naysayers and political opponents who predicted double-digit rate increases" in exchange plan premiums (Karlamangla, Los Angeles Times, 7/31).

However, state Sen. Norma Torres (D-Pomona) in a release said that even the slight increases are "a reminder that more must be done to enroll young and healthy consumers" and that the rates should "be a wakeup call" to increase efforts to enroll more young adults and Latinos in coverage (Torres release, 7/31).

In addition, Consumer Watchdog President Jamie Court said the rates could have been influenced by a measure on the state's November ballot that would give the insurance commissioner regulatory authority over health insurance rates. Court said, "Health insurance companies know better than to spit in the eyes of voters before they decide whether to enact greater accountability for the industry" (Los Angeles Times, 7/31).