If you review the 2018 Covered California rate booklet, which doesn’t actually have any rates in it, you notice that many of the carriers are having modest rate increases. Most of the rate increases are around 10% or less. Some carriers such as Blue Shield, Health Net, and Oscar are dropping rates in some regions. What jumped out at me was Molina which was identified as having rate increases at a minimum of 16% and up to 51% in the regions they offer health plans.
Both DMHC and CDI make their rate review process as transparent as possible to the public. This is not the case for Covered California. The reason Covered California gets to negotiate rates in secret is because the health plans are considered contractors and the rates are considered bids. I learned this after I filed a Public Records Act request asking for the rates submitted to Covered California.
But how does an enrolled individual in a standard Silver 70 plan, who is not eligible for the CSRs, feel about subsidizing lower income plan members? Could the argument be made that some individuals are paying an inflated premium, close to a Gold plan, but only receiving Silver plan level benefits? At a very minimum, the inflated Silver plan rates are a distortion of the health insurance market place. One of the goals of the ACA and the exchanges like Covered California was to bring more transparency and accountability to the health plan selection process for consumers. If the inflated Silver plan rates, along with artificially inflated subsidies, do become a reality, the market place for health insurance will take a step backwards as plan selection becomes more confusing for consumers.
For years I have been at odds over how the San Juan Water District (SJWD) set their daily and metered rates for water in the Granite Bay area. Finally, SJWD is proposing a five-year rate structure that addresses the long term capital improvement needs of the district. The unfortunate 8% and 9% increase in the rates is a reflection of past Board decisions not to implement a stable rate structure for future maintenance, operations, and system upgrades.
Since the beginning of health care reform under President Obama there has been intense speculation about how the health insurance companies will react when setting rates for the various health plans they offer. Health insurance is not a commodity like wheat, oil, or pork bellies where the market place of buyers and sellers agree upon a price. While competition does impact the rates to a certain degree, health insurance prices are largely determined by the health care services to be covered, the cost of health care services, and the expected claims for those services within a geographical location where the plan is being offered.
The one aspect of health insurance that the Affordable Care Act did not address is the cost of health care services. Without a governor on the prices that doctors and hospitals can charge, the health insurance companies must constantly increase their rates to cover the cost of health care expenses that seem to rise faster than the national average for inflation. One way to reign in the ever increasing costs of health care is by providing consumer information on the cost of health care services through price transparency. The Health Care Transparency Project has started an online petition to request the Trump administration implement price transparency for consumers.
With the loss of the Anthem Blue Cross PPO plans in most of California and the double-digit rate increases on many plans, consumers are starting to look at the HMO plans available to them. There was a time when HMO plans were always more expensive than PPO plans. In the new health insurance landscape of Obamacare, HMO plans are becoming less expensive. But is a HMO plan right for you and your family?
I would not have believed it had I not witnessed it with my own eyes. When I renewed the Covered California health plan for a client her monthly premium amount she will be responsible for will actually be lower in 2017. Even though the carrier had an overall rate increase and she was another year older, the Advance Premium Tax Credit monthly subsidy calculated by Covered California will be larger in 2017. The net result is she will be paying less than $5 per month for the same Silver health plan in 2017.
Many Californians are facing sticker shock over the new health insurance premiums for their 2017 individual and family plans. Covered California and the insurance companies have pointed the finger at the elimination of the Affordable Care Acts reinsurance provision for the health plans. However, another contributing factor is the lower copayments on specific benefits Covered California has mandated in the new health plans. Consumers will be paying less for some out-of-pocket expenses. As the health plans must make up the difference for consumer’s lower cost-sharing, the rates must inevitably reflect this reality.
A really nice tool for agents and consumers to compare health insurance plan rates is the Shop and Compare Tool. Within this website you can also download a proposal that lists the available health plans by metal tier level for the household information entered. Unfortunately, I recently found that the proposal created may not always match the website results shown.