Covered California on Tuesday said insurance rates will jump an average of 12.5 percent for next year, driven in part by uncertainty about the future of Obamacare.
Peter Lee, executive director of Covered California, described 3 percent of premium increases as an “uncertainty surcharge,” fueled by the unclear future of the Affordable Care Act. Uncertainty about the law also will prompt a big private insurer, Anthem Blue Cross, to stop selling Covered California plans in Southern California.
“While we have done a lot in California to give plans some certainty, they’re still nervous,” Lee said of insurers.
Although a last-ditch Republican effort to repeal Obamacare failed last week, the Trump administration could could undermine the law.
It remains uncertain if the Trump administration will continue making monthly payments that allow insurers to reduce co-pays and deductibles for low-income consumers as required by the Affordable Care Act.
Roughly 649,667 people in Los Angeles, Orange, Riverside and San Bernardino counties purchase insurance through Covered California. Eleven insurers offer coverage throughout the state. And while Anthem Blue Cross scaled back, none dropped out for next year.
Q: Why are rates going up?
A: Rates are mostly going up because of increased costs of providing medical care, Lee said. That accounts for roughly 7 percent of the increase. Another 2.8 percent comes from the end of a federal health insurance tax holiday. The remaining 3 percent is the uncertainty over the future of the Affordable Care Act, including whether the tax penalty for going without insurance will continue to be enforced.
“The rates in California are looking better than what we’ve seen in a number of other states,” said Cynthia Cox, associate director of health reform and private insurance at the Kaiser Family Foundation, a nonprofit health care research group in Menlo Park.
Shana Alex Charles, a professor of health sciences at Cal State Fullerton, said ideally annual premium increases should stay under 10 percent, which they would have if not for the uncertainty.
“We can say this is exactly how much the drama in D.C. is hurting the citizens of California,” Charles said.
Q: How much are premiums on average going up in my county?
A: About 87 percent of Covered California consumers receive federal subsidies to pay for roughly 71 percent of their premiums. As premiums rise, subsidies go up too, helping cushion consumers from the rate…