2016 Health Insurance Rates Remain Low Under Covered California
FOR IMMEDIATE RELEASE: CONTACT:
July 27, 2015 Nicole Kasabian Evans
(916) 552-2914
2016 Health Insurance Rates Remain Low Under Covered California
Covered California and Health Plans Ensure Californians Have Affordable, Quality Health Care
Sacramento, CA – Covered California today announced health insurance rates for 2016, with a statewide average increase of just 4 percent, a dip from last year’s increase of 4.2 percent. Many consumers will see their premiums stay the same or even go down, according to Covered California. Single-digit premium changes reflect strong competition in the marketplace, which is helping to keep rates low as California moves into its third open enrollment period in the exchange.
“The mix of a competitive health insurance market, high enrollment, and a commitment to affordability has resulted in three consecutive years of modest premium pricing,” said Charles Bacchi, President and CEO of the California Association of Health Plans. “However, premiums reflect the underlying cost of care and as costs for doctors, hospitals, and prescription drugs rise, it impacts the price we all pay for health coverage.”
With two new health plans joining selected regions of the California marketplace in 2016, California's competitive exchange market now includes a dozen different plans. Roughly 99 percent of enrollees have at least three plans to choose from, and in large metropolitan areas there are five to seven health plans offering coverage.
California is at the forefront of providing affordable health care under the Affordable Care Act (ACA) with 1.4 million people enrolled in Covered California. Combined with the expansion of Medi-Cal, California’s uninsured rate has plummeted to 11 percent. Health plans have worked diligently to keep premiums down, but some increases were necessary to account for the rising cost of care, mandated benefits, and skyrocketing prices for specialty medications.
When asked about future cost drivers that could increasing the price of coverage, Covered California Executive Director Peter V. Lee noted two primary concerns – increasing drug prices and provider consolidation.
Lee noted that while health plans operate with very small profit margins – just 1 percent for exchange plans – drug company profits are 19 percent. He noted that the maker of the latest Hepatitis C treatments, Sovaldi and Harvoni, has reported a profit margin of 88 percent.
Earlier this year, health plans worked with Covered California to further reduce patients’ out-of-pocket costs for prescription drugs. However, with prices for specialty drugs increasing 25 percent in 2014 and the fastest drug spending growth in more than a decade, the precipitous rise in prescription drug costs will ultimately drive up the price of premiums.
As an example of how prescription drugs impact the cost of coverage, CalPERS reported nearly half of this year’s premium increases were due to rising pharmacy costs. CalPERS has roughly the same number of enrollees as Covered California and, similarly, serves as a bellwether for what’s happening in the commercial market.
“The explosive growth of specialty drug prices threatens the affordability of health care,” said Bacchi. “We need to know the rationale behind six-figure drug prices in order to have an effective public dialogue and ultimately keep costs down.”
For more information on Covered California, please visit CAHP’s dedicated ACA web page or http://www.coveredca.com/. More information on high cost drugs is available here: http://www.calhealthplans.org/policy-analysis.html.
###
CAHP is a statewide association representing 45 full-service health plans. Through legislative advocacy, education and collaboration with other member organizations, CAHP works to sustain a strong environment in which our member plans can provide access to products that offer choice and flexibility to the more than 28 million members they serve. For more information, please visit http://www.calhealthplans.org/ or call (916) 552-2910.