Yesterday, Covered California for Small Business (CCSB) released its health plan choices and rates for the 2018 plan year. The weighted average rate change of 5.6 percent is less than last year and is slightly lower than the overall medical trend for small- and large-group business lines in California. CCSB will offer five plans in 2018, including two preferred provider organization plans with full provider networks from Blue Shield of California and Health Net; two health maintenance organization plans that are provider- and hospital-based from Kaiser Permanente and Sharp Health Plan; and Chinese Community Health Plan in San Francisco. CCSB will not offer Western Health Advantage in 2018, which will impact an estimated 350 consumers.
Currently, more than 35,000 individuals have insurance through CCSB, representing a growth of approximately 7,600 individuals for a 27 percent gain in membership over this time last year. CCSB also announced that next month it will launch enhanced web-based enrollment and renewal capabilities for customers, certified insurance agents and general agents.
At its meeting last week, the Covered California Board of Directors announced it would take three actions in an effort to stabilize the individual health insurance market and continue to provide consumers with choice and the lowest rates possible in the face of persistent national uncertainty. First, Covered California will wait until Sept. 30 to decide whether its health plans must add a cost-sharing reduction (CSR) surcharge to Silver-tier plans. In past years, the federal government reimbursed health insurance companies for those costs; that funding is now in question. If Congress and the President decide to fund CSRs by Sept. 30, rates for Silver-tier plans could move forward without the added CSR surcharge. If a decision is not made by Sept. 30, Covered California will implement its contingency plan in which the total premium would reflect the CSR surcharge for consumers with Silver-tier plans who receive subsidies.
However, Covered California reports that, in most cases, consumers would not see a “net” change in what they would pay since their premium tax credit would also increase. Last week, a report from the Congressional Budget Office found that ending the CSR reimbursements would raise premiums by about 20 percent in 2018 and 25 percent in 2020 and subsequent years. In addition, because the premium tax credit would rise along with the premiums, ending CSR reimbursements would increase the federal deficit by $194 billion over the next 10 years.
Today, Covered California released the attached proposed rates for the 2018 individual market, announcing that all 11 of its participating health insurance companies will return for the upcoming year. Covered California Executive Director Peter V. Lee said the average statewide rate change for 2018 will be a 12.5 percent increase, and noted that consumers can reduce that amount to less than a 3.3 percent increase if they shop for the best value and switch to the lowest-priced plan in the same metal tier. In addition, consumers will see federal subsidies rise, as they are tied to the price of the second-lowest-cost Silver plan. Those subsidies will help offset a significant portion of the rate change.
The rate change varies by health plan and region. Covered California notes that without the Affordable Care Act-mandated health insurance tax — a one-time increase of an average 2.8 percent — the average increase would have been less than 10 percent.
The California Department of Health Care Services (DHCS) and Covered California have released the attached quarterly report on eligibility and enrollment processes for all California insurance affordability programs, including Medi-Cal and qualified health plans (QHPs) available through Covered California. The report — required under AB X1-1 (Chapter 3, Statutes of 2013) — details pathways and outcomes for new applicants, including application sites, consumer assistance, applicant demographics, resulting eligibility determinations, plan enrollment choices, and the volume and outcome of eligibility appeals. It provides application, eligibility and enrollment data from July 1, 2016, through Sept. 30, 2016.
Last week, the Covered California board adopted a new policy to provide stability to the market and help reassure health insurance companies that have expressed concern about participating in 2018 in the face of continued uncertainty over the federal government’s funding of cost-sharing reduction (CSR) reimbursements.
Earlier this year, the federal government committed to funding CSRs through May 2017, with no guarantee it will continue. In the absence of a clear and reliable policy from the federal government that it will provide CSR funding through 2018, Covered California’s board acted to place any rate increases caused by the uncertainty onto Silver plans. For advanced premium tax credit (APTC) recipients, the amount spent on premiums is a percentage of income based on the second lowest Silver plan in their service area, no matter how much the premium costs. If premiums go up as CSRs are built into the cost of the Silver qualified health plan, consumers should be insulated as the additional costs will be covered by APTCs. While Silver level consumers will see an increase in the gross cost of their premiums, they will also see an increase in the amount of financial assistance they receive, leaving their net payment virtually the same. In addition, Covered California will require plans to offer a separately rated, non-mirrored Silver plan off exchange that is nearly identical to the Covered California patient-centered benefit design. These plans would not include any premium increase connected to the lack of CSR reimbursements and should mitigate the impact of any rate increases on approximately 1 million unsubsidized consumers.
A new analysis of Covered California’s enrollment shows that California’s risk score improved from 2016 to 2017, indicating a healthier mix of enrollees. The study, conducted by Health Affairs, combined Office of Statewide Health Planning and Development data with data from Covered California’s enrollment system to determine standardized risk scores. Overall, in the one-year period studied, six carriers’ risk scores declined, while one stayed the same and four increased. Statewide, the risk score declined from 1.11 in 2016 to 1.09 in 2017, indicative of a healthier population with respect to chronic conditions. According to the report, Covered California enrollment remains strong and stable despite uncertainty about health care coverage at the federal level.