Premiums for exchange plans in California are looking pretty affordable. Is this because insurers are fearful of a rate review process that might be approved by voters in the fall, or a large, diverse market spreading out risk?
Across Covered California's 19 rating regions, with 10 insurers statewide, the average premium increase for 2015 plans is 4.2 percent, with many increasing in the mid-to-high single digits, some increasing just a bit and only a few coming with double digit increases.
"As we move into our second open enrollment and first renewal for many Californians, we are glad to see consumers have a real choice, with affordable options in all regions," said Covered California executive director Peter Lee in a media release.
While the overall average increase is 4.2 percent, the actual increases that the 1.4 million Californians who enrolled in exchange plans will see is going to vary.
Some -- 16 percent -- will actually see their premium stay constant or decrease. About 35 percent will see modest increases of less than 5 percent, about 35 percent will see increases of 5 percent to 8 percent, and 13 percent will see increases of more than 8 percent, with most of those being less than 10 percent.
Some consumers may be a bit shocked. In greater Sacramento, the highest plan increase will be 16 percent; in greater Los Angeles, the highest plan increases will be more than 11 percent.
But in 14 of the 19 rating regions, the highest premium increases are not exceeding 10 percent -- a major achievement, said Lee. The exchange, he said, is succeeding in its role as an "active purchaser" that "engaged in vigorous back-and-forth with insurance companies to keep increases at a minimum, deliver networks of doctors and hospitals that meet consumers' needs and give them meaningful choice when shopping for the plan that is the best fit."
Another state insurance official, insurance commissioner Dave Jones, has a different interpretation, arguing that a big factor influencing insurers is the possibility of a new rate review process -- with premium rejection authority -- that Californians will vote on this fall.
"Health insurers have hit the pause button," Jones said at a press conference, and "there's no guarantee insurers will continue."
The rate review factor
Jones is hoping to become the 36th insurance commissioner to have rate review authority. The proposal Californians will vote on in November, sponsored by the group Consumer Watchdog, would expand on existing transparency and public review requirements and let the state reject health insurance premium increases -- something Jones describes as a "missing piece of the Affordable Care Act."
The rate review system would apply to commercially insured residents, including the 1.4 million and growing in Covered California, and about 4.5 million residents enrolled in other individual and small group plans.
An industry consortium called Californians Against Higher Health Costs, led by WellPoint's Anthem Blue Cross with support from the state health plan and medical associations and others, is leading a public advertising campaign to try to convince residents to reject the idea of adding more regulations to the current, developing ACA market.
The new policy would give "a single elected politician" -- insurance commissioners are elected in California -- "almost total control over our health insurance," the group said in a media release. It would also add "another layer of regulation over a market sector historically overseen by the Governors' Department of Managed Health Care."
While the possibility more regulatory requirements may certainly be the minds of insurance executives selling Covered California plans, premium increase were on track to be fairly reasonable anyway, as Larry Levitt, senior vice president at the Kaiser Family Foundation, argues.
Covered California was "well positioned for modest premium increases," he wrote, thanks to a competitive market (with at least three insurers per region), large enrollment, a diverse risk pool and no extension of pre-ACA plans.