Get ready to pay more for health care next year: hikes from 5 to 24 percent in Valley

Consumers buying insurance next year in Merced and Mariposa counties will see a rate increase for monthly premiums of 24 percent on average – nearly twice the statewide hike.

In Fresno, Kings and Madera counties, the rate increase is much lower – 4.7 percent – but about 30 percent of consumers will have to find a new plan since Anthem Blue Cross will not be offering coverage in those counties next year.

Insurance premiums are increasing 12.5 statewide on average. While Anthem is pulling out of 16 of 19 Covered California regions, including Region 11 in the central San Joaquin Valley, the state will again have 11 plans through the insurance exchange.

This is the second year for the state to have double-digit increases in premiums. In the central San Joaquin Valley, rates rose from 8.4 percent to 10.8 percent on average this year. Statewide, the rates increased 13.2 percent on average in 2017. Covered California attributed some of the increase this year to the phase-out of two federal programs designed to stabilize the insurance market.

Uncertainty over the future of the Affordable Care Act will account for about 3 percent of the statewide increase in 2018, said Peter V. Lee, executive director of Covered California, the state’s health insurance exchange created for the Affordable Care Act, also known as Obamacare. California also got two sets of premium rates from insurers for 2018 because of the uncertainty.

And Lee said Tuesday that lower-income consumers could face a 12.5 percent surcharge if the federal government does not fund cost-sharing subsidies.

Covered California will need to make a decision about imposing the surcharge by the end of this month. Lee said he has relayed the urgency for the Trump administration to make a decision about subsidies in a letter to Tom Price, secretary of Health and Human Services, and Seema Verma. administrator of the Centers for Medicare & Medicaid Services.

Lee said Trump needs to provide clear guidance. “A Tweet would not be enough. This needs to be a statement between Congress and the White House that there is certainty through 2018,” he said.

It’s too soon to tell how the increase will impact people in Merced County, said Alex Hernandez, a Covered California certified insurance agent in Merced, because specific rates on the county level haven’t been released.

Last year, the premium increases in Merced County didn’t gravely hike up the amount most people had to pay, Hernandez said, because when premiums go up so do subsidy’s, which can offset the increase.

“It might not cover the amount in full but will help,” Hernandez said. “Last year not a lot of members saw an increase.”

Also, smaller counties, like Merced, tend to receive more assistance, he said, “that’s what’s really going to help.”

That “ongoing uncertainty” could mean that roughly 650,000 consumers who buy Covered California’s most popular insurance plans, those in the silver tier, will face a double whammy on their premium prices. The exchange said it may have to add a 12.4 percent surcharge to premiums in that tier because insurers are worried about continued federal funding that lowers out-of-pocket costs for enrollees.

The good news is that those policy holders won’t feel the full force of that increase. That’s because of a cap on out-of-pocket costs for policy holders whose income is 250 percent of the federal poverty level. Once consumers hit that out-of-pocket ceiling, Medi-Cal will pick up the tab.

Rate hikes are being implemented to guarantee insurers they’ll be reimbursed for discounts they are required to give consumers in the popular silver tier plans. The Affordable Care Act, commonly called Obamacare, mandates that co-pays and other fees be reduced on a sliding scale, depending on income.

But in a major flaw in the law, the U.S. House of Representatives created no mechanism to appropriate funds to reimburse insurers for those discounts. Under the Obama administration, the Department of Health and Human Services set aside the funds annually and paid it, but a lawsuit by House Republicans has challenged the constitutionality of those payments.

The Trump administration has committed to paying those so-called cost-sharing reductions only a month at a time, leaving insurers unwilling to commit to yearlong contracts with health exchanges such as Covered California.

The Covered California staff had to figure out a way to make the state’s health insurance marketplace work, spokeswoman Amy Palmer said, and that meant avoiding a mass exit because of increased premiums and keeping co-pays low enough that consumers would continue accessing care when needed.

Rather than broadly raising all premiums, they hit upon the idea of imposing surcharges only on the silver-tier plans. That would trigger the caps on out-of-pocket costs for policy holders, requiring the federal government to make payments that would allow insurers to continue offering lower co-payments and deductibles. Absent a decision by the federal government in the next few weeks, Lee said, Covered California will proceed with the surcharges.

“This action allows Covered California to keep the market stable and protect consumers from this uncertainty,” Lee said. “While most silver-tier consumers will not see the full impact of the ‘CSR surcharge,’ and every consumer could avoid paying any additional premium by shopping, we hope that we do not need to implement this work-around that would cause unnecessary confusion and ultimately cost the federal government more than it would to continue to make the payments directly.”

Covered California said that the silver-tier plans would no longer be a good option for consumers who receive no subsidy and that its representatives and independent insurance advocates would work to get out the message. All the rate changes must be approved by state regulators before they can be implemented.

This story was originally published August 3, 2017 at 10:16 AM with the headline "Get ready to pay more for health care next year: hikes from 5 to 24 percent in Valley."