California’s Modest Rates: Behind the Numbers

A 40-year-old Californian reportedly would pay anywhere from about $40 to $300 per month for a mid-level health plan in the state’s HIX, depending on the individual’s income. But there’s more to the story than these modest numbers reveal.

Anthony Wright, executive director of the advocacy group Health Access, recently told Reuters that the premium projections represent “a revolutionary improvement to move from a broken market where people are charged by how sick they are, to a competitive market where people pay what they can afford, based on a percentage of their income, on a sliding scale.”

Not exactly, according to California Republican Assemblyman Dan Logue, who compared the rates to “a shell game” and predicted that a tax hike would be needed to fund subsidies, which would trigger higher prices at the gas pump, grocery store and other venues.

Thirteen of the more than 30 health insurers that had applied to participate in the California Health Benefit Exchange will offer coverage in the HIX. Peter Lee, the exchange’s executive director, has noted that residents can expect to pay up to 29% less than current rates for small businesses.

The public exchange rates being reported in California and some other states across the U.S. do not necessarily reflect what individuals may pay once their age, location, smoking status and income are all factored into the mix, cautions Robert Zirkelbach, a spokesman for America’s Health Insurance Plans. Another consideration is the regulatory environment that’s in place in each of these states.

“Many people are going to be required to purchase coverage that’s much more comprehensive, but also more expensive than what they’re purchasing today,” he says. A recent Milliman report estimated that premiums could climb an average of 30% next year for many of the roughly 1.3 million middle- or higher-income Californians with individual-market coverage.

Conspicuously absent from the recent announced rates in California is how they compare to what people are paying today, which Zirkelbach says could vary significantly from one individual to the next. Some young people, however, are expected pay nothing at all, depending on their earnings, while others will qualify for subsidies to help finance their coverage.

One bright spot is that market forces are already shaping the HIX model. “We’re seeing plans offer a variety of innovative benefit packages in a lot of these exchanges, including a high-value provider network, as well as programs that promote prevention and wellness, and coordinate care for patients with complex medical conditions,” Zirkelbach observes. The underlining goals are to improve care, while also making coverage more affordable, he adds.

Concern has been voiced about a lack of HIX competition in some states, such as Alabama and Alaska, where certain health insurance carriers dominate those markets. But Zirkelbach explains that “just because one health plan has large market share doesn’t mean there’s not competition in the marketplace or there are not choices for consumers.”

He points to a variety of coverage options from different health plans as well as multiple policies being available within any given carrier – information that’s easily accessible at and categorized by Zip code.

Bruce Shutan is a Los Angeles freelance writer.


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