SANTA MONICA – A more than 13 percent increase in health insurance premiums for 2017 announced by Covered California hasn't prompted any action from California lawmakers or voters, an industry spokeswoman said during a recent interview.
"There is no active legislation on this topic," Nicole Kasabian Evans, spokeswoman for California Association of Health Plans, said during a Northern California Record email interview. "In fact, the legislature has rejected government price setting for health coverage several times, as did the California electorate in 2014."
Dozens of other states have enacted health insurance rate regulations but, thus far, California is unmoved, the California-based, nonprofit consumer education and advocacy organization Consumer Watchdog said in a press release.
"These outrageous premium hikes are the consequence of California's failure to adopt health insurance premium regulation like the majority of the states and the disappearance of federal subsidies for insurance companies to even out bumps in the road," Consumer Watchdog President Jamie Court was quoted in the press release.
Consumer Watchdog had been a sponsor of rate regulation Prop 45, which voters rejected in 2014.
"The ballot initiative failed to pass in a record-low turnout election but garnered 41 percent of the vote, despite a $57 million insurance company campaign against it," Court said. "When three health insurance companies control 90 percent of the market there is no bargaining with them absent a hammer. Rate regulation is the hammer. California consumers cannot continue to pay more for very limited doctors and hospital networks. Rate regulation needs to move to the top of the legislature's list."
Covered California, the state's health insurance exchange, announced in July a 13.2 percent statewide average rate increase for 2017. That, according to the announcement, amounts to a three-year average increase of 7 percent if the expected 2017 rate increase is averaged with rate hikes in 2015 and 2016. That, according to Covered California, is lower than the average annual increases recorded in the years before the Affordable Care Act in California.
While rate increases hit consumers in their wallet, a cap on health insurance rates isn't the answer, Evans said.
"Existing laws that ensure premium dollars go to medical care and those that require rate filings are made public and reviewed by regulators provide important consumer protections," she said. "Subjectively capping health insurance rates does nothing to address the underlying costs that drive premiums, which is why both lawmakers and voters have rejected proposals to regulate the price of health insurance.”
The announced rate increase for next year does have some looking nostalgically back to the failed Prop 45 in 2014 but observers point out that the measure was flawed. While the Los Angeles Times ran an op-ed piece in favor of the ballot measure, other major newspapers across the state voiced strong opposition, citing the initiative’s impact on the Affordable Care Act in California. Groups such as California-based Small Business Majority, in addition to academics and health care experts, also came out against the ballot measure.
Those academics and health care experts, which included Covered California board members, raised concerns that Prop 45 would create obstacles for prospective enrollees in the state’s health insurance exchange, in large part because the initiative would have allowed outside groups and individuals to file lengthy legal challenges against Covered California plans.
The 2017 rate increase has several causes, which are detailed in a California Association of Health Plans infographic, which says the state's individual health insurance market has grown more than 50 percent since Covered California launched in 2014 and now provides comprehensive coverage to 2.3 million California residents.
That has brought with it increased spending on Medicare and a need for greater experience and data access, according to the infographic. California also has to deal with the phasing out of two federal funding programs that had helped during the first few years under the Affordable Care Act and with reports of some enrollees gaming the system by signing up for coverage only when they required medical care.
While rates will go up in 2017, nine out of 10 enrollees will qualify for subsidies that will help them pay for coverage, according to a California Association of Health Plans press release issued when the rate increases were announced.
"The vast majority, 90 percent, of Covered California policy holders get generous government subsidies to help pay for the cost of coverage," Evans said. "We also have a highly competitive marketplace in California, which allows consumers to shop for the health plan that meets their needs."