Health Insurance

California Obamacare prices set to rise average of 13.2 percent in 2017

Attendees wait in line to speak with health care volunteers about affordable health care
David Paul Morris | Bloomberg | Getty Images

The Golden State's Obamacare rates? Not so great.

Prices for Obamacare health insurance plans sold in California are set to rise next year by an average of a whopping 13.2 percent, officials announced Tuesday.

That's a big price jump for the biggest state-operated Obamacare marketplace in the nation — about 9 percentage points higher than average price hikes of 4 percent or so for premiums for each of the past two years.

And the prices revealed Tuesday for individual health plans mirror trends seen elsewhere in the United States: much higher Obamacare prices proposed for 2017 after some insurers cite losses and sicker-than-expected customers.

Covered California, the state's Obamacare exchange, said that the higher rate hikes are "directly linked" to the higher health-care costs being borne by insures, and not to administration costs or profit. The exchange said that rising prices of specialty drugs have particularly affected health costs, and also said that insurers are dealing with the effects of pent-up demand for health-care by customers, as well as an adjustment in a funding mechanism that is designed to lower insurers' business risk.

The price hikes are for private health plans covering individuals and families. They are not reflective of price increases paid by people who have insurance through their jobs.

The head of Covered California was quick to note that most of the 1.4 million customers on that marketplace will actually end up paying less in 2017 than they do this year, or see a rate hike of no more than 5 percent, if they go to the trouble of switching their health plans during open enrollment.

"Shopping is going to be more important this year than every before," said Peter Lee, executive director of Covered California. Most California residents will have three or more insurers to choose plans from next year.

And Lee's exchange also pointed out that many customers will be insulated from the rate hikes because of the federal subsidies they receive to help pay for their monthly premiums. About 90 percent of Covered California's customers get such aid, which rises in value as their premiums rise, and which is available to people with low or moderate incomes.

The exchange noted that the average subsidy covers about 77 percent of premium costs.

However, customers who aren't subsidized, either because they earn too much money or because they buy individual health plans outside of the exchange, are fully exposed to the rate hikes.

"Some consumers who choose to keep their plan will see a significant increase in their premium for 2017, while others will see a more modest increase, depending on where they live and what insurance plan they have," Covered California said in a statement.

"Consumers will begin receiving notices in October, when they will have an opportunity to review their new rates and change plans for their 2017 health coverage."