Jones Unveils 18-Region Plan for Setting Health Insurance Rates
On Tuesday, California Insurance Commissioner Dave Jones (D) released a proposal to divide California into 18 geographic regions for setting health insurance rates, the Sacramento Bee's "Capitol Alert" reports.
Jones seeks to use his plan to replace legislative proposals that would establish six regions in 2014 or 13 regions in 2015 (Sanders, "Capitol Alert," Sacramento Bee, 2/19).
Under the Affordable Care Act, insurers no longer can deny coverage based on pre-existing conditions or place lifetime limits on medical care. They also cannot charge older policyholders more than three times what younger enrollees pay.
Observers say that these restrictions leave geography as one of the only factors that insurers can use to adjust premiums.
The federal government has proposed that states avoid creating more than seven geographic rating areas to prevent insurers from charging excessively high rates in certain regions. However, California's health exchange has proposed using 19 rate-setting regions to accommodate the state's size and diversity.
Consumer advocates are concerned that smaller rate-setting regions will allow insurers to hike rates in areas that are:
- Rural; or
- Less healthy (California Healthline, 2/19).
According to Jones, a Department of Insurance analysis found that the maximum premium increase based on geography would be 22.6% for the Legislature's six-region proposal and 25.1% for the 13-region plan. Jones said there would be an 8% maximum premium increase under his 18-region proposal ("Capitol Alert," Sacramento Bee, 2/19).
He added that the San Francisco Bay Area could experience the highest premium increases under the six-region proposal because there are numerous large, costly hospital systems in the area (Colliver, San Francisco Chronicle, 2/19).
The DOI analysis also examined the average premium increases under the plans, finding a:
- 9.1% average increase under the six-region proposal;
- 4.4% average increase under the 13-region proposal; and
- 3.5% average increase under Jones' proposal.
Jones said, "I believe very strongly that we should draw regions in a way that minimizes rate increases" ("Capitol Alert," Sacramento Bee, 2/19). He added, "There is a lot of interest in doing this quickly," but it is "important to get it right as well so we can minimize any rate shock" (Terhune, Los Angeles Times, 2/20).
Anthony Wright -- director of Health Access California -- said that he has not reviewed Jones' proposal.However, having more regions is not necessarily better for enrollees, according to Wright. He said, "We've generally supported a fewer number of larger regions, both to prevent insurance company game-playing â¦ and for the opportunity to provide more transparency and simplicity" ("Capitol Alert," Sacramento Bee, 2/19). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.