Covered California has just released their 2019 individual market rates increase for the 2019 individual health insurance marketplace. The weighted average rate change will be 8.7 percent. For a wide part of Los Angeles (Region 16) will follow the 8.6 percent weighted average increase, however, Region 15, which is located in the Northeast of Los Angeles will have a 10 percent increase. Santa Barbara & Ventura region will see an 8.7 percent increase; Orange County, San Diego & Riverside regions: 9 percent and San Francisco: 9.4 percent weighted average rate change. This compares to a weighted average premium increase of 12.5% for 2018 and 13.5% increase in 2017 statewide.
Without the federal decision to eliminate the individual mandate penalty in 2019, Covered California states that Californians would be seeing a rate change closer to 5% percent. The insurance companies foresee a higher cost due to the elimination of the mandate penalty, especially as young healthy individuals will be less likely to participate in the Affordable Care Act health insurers’ risk pools, creating risk pools with a higher concentration of sick individuals and thus higher overall medical costs per capita. They are estimating that 262,000 consumers will leave the individual insurance market. Therefore they are calculating between 2.5 to 6 percentage points more to their rates.
88 percent of Covered California’s policyholder are receiving subsidies. For them, the good news is that the subsidies are rising alongside the rate increases, which means that in effect they will feel the rate increase less. The Federal government is estimated to pay an additional $250 million in federal premium tax credits in 2019 than for 2018. Bronze level plans are rising with 10.2 percent which is higher than the Silver on Exchange plans with 5.2 percent. In 2019, Californians who shop the market and opt to switch to a health plan with a smaller network will offset the rate increases while changing to the lowest-priced plan in their metal tier or downgrade to a lower metal tier. Furthermore, all 11 insurers currently participating in the California individual marketplace will continue participating in the state in 2019.
Middle-class Californians, who earn more than the 400 percent Federal Poverty Level, and are not eligible to receive subsidies will “bear the full brunt of the increase “accordingly to Peter Lee. It remains to be seen if outside of Covered California the health insurance carriers will start to offer variations of health plans which might have adjustments to the metal tier plans or possibly improved HSA health plans. As an alternative, healthy Californians might look for short-term insurance or a variety of worldwide insurance carriers as they do not have to face the penalty of not having a health plan with the 10 essential benefits. To offset the health insurance increases, Californians should also reflect how important their hospitals and doctors of choice are. Choosing smaller networks with fewer hospital and doctor choices will allow lower health insurance premiums.
In its sixth year, Covered California remains “alive and strong”, currently serving more than 3.5 million Californians for health insurance and 5 million Californians for Medi-Cal, the state’s version of the federal Medicaid welfare program. Unlike several states across the United States, we as Californians are fortunate enough to have more than one insurer participating in the individual market. As a state, we also have a lower risk score versus the average state nationwide and we have not seen the off-exchange disenrollment as prevalent as other states, helping stabilize our premiums. It is still obvious that premiums continue to rise above inflation which has impacted everyone’s available income. The Affordable Care Act ensures that we keep comprehensive coverage, no one can be excluded or charged more for a pre-existing condition, and that we have the tools to provide great healthcare to both the rich and the poor.
At Solid Health Insurance Services, we will always strive to keep our clients informed about the healthcare trends and changes to the state and federal legislation around the Affordable Care Act. Our mission at Solid Health Insurance Services is to find for you affordable health insurance, life insurance, long-term care insurance and travel insurance which fits your medical needs and budget for your individual, family and business needs. Please contact us at 310-909-6135 or at info@solidhealthinsurance.com.