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Covered California Announces Proposed Rate Increases for Individual Health Policies

Consumers Union Urges State Regulators to Minimize Rate Hikes And Advises Consumers to Shop for the Best Value

SACRAMENTO, CA — Californians who don’t qualify for federal subsidies may face steep premium hikes if they keep their current health insurance company under proposed rates announced today by Covered California, the state’s individual health insurance marketplace.  Consumers Union, the policy and advocacy division of Consumer Reports, urged state regulators to review the proposed rates closely to ensure they are reasonable and justified, and advised consumers to shop around to find the best deal and to consider plans they haven’t purchased from before.

During a summer punctuated by higher rate increase projections nationwide, and with the termination of the federal re-insurance program, greater increases in California than in prior years were expected. Just as rates will increase, so will financial subsidies—which nearly 90 percent of consumers in Covered California receive—thus softening the blow of premium increases. Additionally, as Covered California noted today, these rate increases are balanced by consumer-focused benefit design. For example, consumers can get out-patient care in the silver, gold, and platinum products without having to meet a deductible, reducing consumers’ health care costs.

“The health insurance marketplace is extremely dynamic, and we hope these proposed rate increases are a one-time adjustment as the market finds its footing,” said Dena Mendelsohn, Staff Attorney at Consumers Union. “We look to state regulators to now closely scrutinize these proposals to ensure that every penny requested is necessary and fair for consumers.”

Consumers should be aware that these are weighted statewide averages. Because health care is local, rates between regions will vary. Consumers should look at proposed rates in their region rather than relying on averages.   The state’s health plan and insurance regulators, the Department of Managed Health Care and Department of Insurance, will subject these rate requests to another layer of review and could press for further reductions if they find any of the increase requests unjustified.

The proposed 2017 rates announced today, once finalized, will affect:

  • Over one million Californians who have already purchased insurance through Covered CA for 2016 and are coming up for renewal this Fall;
  • Those applying this Fall for coverage from Covered California in 2017 as well as those who buy certain individual policies outside of Covered California for 2017. The law requires companies that sell products in Covered CA to sell the same products outside of the Exchange at the same premium. (Note: Financial assistance, which nearly 90% of enrollees at Covered California receive, is only available for policies purchased through the exchange).

As in prior years, Consumers Union will review carriers’ rate requests in detail and submit comments to the Department of Managed Health Care to ensure carriers’ requests are justified. Those comments will be posted at www.ConsumersUnion.org. Consumers have 60 days to submit their own comments to the regulators as well. Rate filings and additional information are available on the following sites:

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Contact:  Michael McCauley, mmccauley@consumer.org or 415-902-9537 (cell)

Consumers Union is the policy and mobilization arm of Consumer Reports.  Consumers Union works for health reform, food and product safety, financial reform, and other consumer issues in Washington, D.C., the states, and in the marketplace. Consumer Reports is the world’s largest independent product-testing organization.  Using its more than 50 labs, auto test center, and survey research center, the nonprofit rates thousands of products and services annually.  Founded in 1936, Consumer Reports has over 8 million subscribers to its magazine, website, and other publications.