Dive Brief:
- The Covered California health insurance exchange announced Tuesday premiums for its plans will go up an average of 13.2% for 2017, ending the exchange's triumphant two-year streak of modest 4% increases.
- The double-digit hike brings the state's ACA plan increases more in line with others around the country despite efforts California officials have undertaken to keep costs in check, including negotiating with insurers.
- Exchange officials attributed the increases to the same factors putting pressure on plans around the country: Rising healthcare and drug costs, and the expiration of federal programs that helped shield insurers from losses during the ACA's earliest few years.
Dive Insight:
The news took some analysts by surprise, coming just a few months after California exchange officials had projected an average premium increase of 8%.
Larry Levitt, a senior vice president at the Kaiser Family Foundation, described the increase as "a chink in the armor of the California story,” while Kathy Hempstead of the Robert Wood Johnson Foundation described it as "a little higher than expected, since California did not seem to have the underpricing that plagued other markets," KHN reported.
The state's two largest ACA plan carriers, which serve about half the exchange's customers, sparked the bulk of the increase. Blue Shield of California got a 19% average increase while Anthem got an average increase of 17.2% in California, exchange executive director Peter Lee said.
Avalere announced in late May that proposed hikes for 2017, based on nine states with complete data available at that time, ranged from 5% in Washington to 44% in Vermont across all silver plans, the most popular level of coverage. In an update last week based on complete data from 14 states, the company specified that premiums for average silver plans were projected to increase 11%, and low cost silver plans were projected to increase 8%.
Meanwhile, Obama administration officials noted the actual impact on consumers will be cushioned for those receiving federal subsidies, and that people may find better deals by shopping around.