Most people who purchase Obamacare coverage in California will be faced with a moderate increase in what they pay for health insurance next year, and many could actually see price decreases if they shop around, officials said Monday as they announced proposed rates.
Covered California, the nation's largest state-run Obamacare marketplace, will also add two new insurers to the 10 that already sell plans on that exchange, who are all returning next year.
Premiums for plans sold on Covered California will rise an average of just 4 percent on a statewide weighted basis in 2016, the third year of Obamacare enrollment, which begins Nov. 1, officials said. That compares to a 4.2 percent average increase statewide for plans that are in effect this year, which have about 1.3 million customers.
"This means the majority of Covered California consumers will either see a decrease in their health insurance premiums or an increase of less than 5 percent if they choose to keep their current plan," the exchange said in a press release.
"In addition, consumers can reduce their premiums by an average of 4.5 percent, and more than 10 percent in some regions, if they shop around and change to the lower-cost plan with the same metal tier."
Obamacare plans are grouped by metal tiers—platinum, gold, silver and bronze—which reflect both their relative cost to consumers, and the amount of health benefits a plan covers compared to what an enrollee pays out of pocket.
Platinum plans tend to cost more than gold plans, which as a rule cost more than silver plans, and so on. Platinum plans also pay the largest share of medical costs incurred by consumers, with the percentage of covered services decreasing along with the relative prices of the metal tiers.
The exchange touted those moderate rate increases, contrasting them with the 9.8 percent average price increases seen between 2011 and 2014 in California's individual health insurance market. Obamacare plans took effect in 2014.
"This is another year of good news for California's consumers and further evidence that the Affordable Care Act is working," said Peter Lee, executive director of the California exchange. "Covered California is holding the line on rates and keeping coverage within reach for hundreds of thousands of consumers, while giving them more choices than ever before."
However, the news is not good for all California Obamacare customers, as some will see much higher price hikes. In the region that encompasses the counties of Monterey, San Benito and Santa Cruz, Covered California consumers will be faced with a 12.8 percent price hike, on an unweighted average basis, and customers of popular "silver" plans are looking at a 14.3 percent increase.
Lee highlighted the exchange's role as an "active purchaser," meaning that it haggles with insurers over the premiums they will charge on the exchange, in contrast to most other Obamacare markets.
"If you really want to see the potential of the Affordable Care Act, California is a good test case as a state that is using all the tools available to us," he said.
Lee noted "these are preliminary rates," and have yet to be reviewed by regulators—a process that will take two months.
Covered California said that the lowest-priced silver plans in the exchange—which cover about 70 percent of medical costs—will see an average, nonweighted price increase of 1.5 percent. Silver plans are the most popular plans on Obamacare exchanges.
The lowest-priced bronze plans, which cover about 60 percent of medical costs, will see prices rise by an unweighted average of 3.3 percent, according to the exchange.
Covered California customers in the southern part of the state will see lower average rate increases than in the northern part, a disparity that Lee said reflected greater competition among health providers and insurers in Southern California.
Obamacare customers in Southern California will see, on average, 1.8 percent increases in the weighted prices of their current plans next year, Lee said. The average premium in Southern California will be $296 per month, without subsidies, the exchange said.
That compares to the average 7 percent price increase that Obamacare customers will see in Northern California. This is on top of premiums that are already 30 percent higher in Northern California, Lee said.
The average premium in Northern California next year will be $384 per month, without subsidies.
Nearly 90 percent of Covered California's customers received federal subsidies to help offset the cost of their premiums. The average amount customers actually paid this year for coverage, after subsidies, was $150 per month, Lee noted.
He highlighted several areas of the state were average prices will rise less than the statewide average.
They include Los Angeles County, the most populous region in the state, where average weighted prices will rise by less than 2 percent. Customers there who are willing to switch to the lowest-priced plans in a metal tier "could see premiums go down to 11 percent" less than current prices, Lee said.
In San Bernardino County, Lee said, prices will go up by 1 percent on an average weighted base, with customers willing to change to the lowest-priced plans seeing average price drops of 12 percent, Lee said.
Covered California also announced that two new carriers will be selling plans on the marketplace in 2016: From UnitedHealthcare, one of the nation's largest insurers, and from Oscar, a small New York-based insurer that was started because of the new markets created by the Affordable Care Act. California will be just the third state where Oscar sells plans, in addition to New York and New Jersey.
The exchange noted that 99.6 percent of customers will have three or more insurance carriers to choose from, up from 92 percent, and that "consumers will have access to more hospitals with more plans."