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Exchange Set To Reveal Premium Rates

Covered California officials on Monday will release health insurance rates for 2016.

Rate increases in the exchange last year averaged 4.2%. The question to be answered today is whether the exchange’s plans will maintain the same rate of increase.

The exchange also is expected to officially announce the addition of two new insurers — UnitedHealth Group and Oscar Insurance Corporation — to Covered California’s options in 2016, generally to expand choices in areas where fewer insurers operate.

One of the bigger concerns raised over Covered California has been its relatively small number of insurers. In 2013, the exchange started out with 13 insurers; that number dropped to 11 in 2014. This year, there are 10 insurers across the state, but four of those insurers serve 94% of the market.

The dearth of options for consumers hasn’t sat well with California’s Insurance Commissioner Dave Jones (D): “We need more competition,” Jones said in a May interview. “One of the disappointing developments in California is Covered California’s decision to restrict competition. And they’ve done that on at least four occasions.”

Also new for 2016 will be a decision announced in May by exchange officials — a first-in-the-nation cap on prescription drug costs. 

The biggest concern for most people, though — consumer advocates, legislators and Covered California officials — has been premium rates. Exchange officials declined to discuss details until today’s official announcement.

According to an estimate by Avalere Health, a Washington consulting firm, 2016 insurance premiums in eight other state exchanges will increase an average of 5.8% for the more popular “silver plans.”

The estimates — that did not include California — ranged from a 5.3% decrease in Michigan to a 12% increase in Oregon.

When Covered California opened in 2013, UnitedHealth Group declined to participate. Now it likely will be restricted to five underserved regions in the exchange’s 19 geographic divisions.

The Oscar insurance group is new to California. It currently sells policies in two states: New York and New Jersey. In California, it’s expected to be restricted to Orange County and some parts of the Los Angeles area.

The cap on prescription drugs announced by Covered California in May will limit the cost of specialty drugs at $250 per month, per prescription, for most exchange consumers. Covered California is the first state health exchange in the nation to implement a prescription-cap policy.

Beth Capell, policy advocate for Health Access California, said the active-purchasing power adopted by Covered California — where it is allowed to negotiate with insurers, decide which insurers can offer health plans through the exchange and set criteria for participating plans — seems to be working.

“For decades, Californians faced the worst of the national health crisis, from a sky-high uninsured rate to denials of pre-existing conditions to double-digit rate increases year after year,” Capell said in a written release. “Last year we saw rates rise at a modest amount, and the number of uninsured cut in half. [Today,] we hope to continue to see the benefits of Covered California using its purchasing power to bargain for the best value.”

To qualify for exchange subsidies, people must make less than four times the federal poverty level, or roughly $47,000 a year for single adults or $97,000 for a family of four.