Federal Exchange Rate Hikes For 2017 Outpace Covered California’s

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The Obama administration announced this week that premiums for certain mid-level plans on the federal health insurance exchange, healthcare.gov, will rise by an average of 25 percent next year, dwarfing this year’s increases and echoing similar announcements by many state-based exchanges.

Larry Mantle of KPCC radio asked health care experts Tuesday to discuss the federal rate hikes on his AirTalk show, and to explain how they compare to those on California’s exchange, Covered California.

Sarah Lueck, a senior policy analyst specializing in health care at the Center on Budget and Policy Priorities, attributed the big rate hikes at the federal level partly to the newness of the Obamacare insurance market.

Because insurers haven’t gotten their pricing right yet, they have been “under-pricing” plans across the country, she said.

“As insurers gain more experience, they’re going to be able to be more accurate with their pricing. For now, that means some increases,” Lueck said. “I do think it’s an initial period of volatility that insurers are going to adjust to.”

Edmund Haislmaier, a health care policy expert with the Heritage Foundation, a conservative think tank, agreed that insurers have “misread” the new market, saying there were more sick people in the insurance pool than expected.

“What you’re getting is a near-Medicaid-level market of people who are used to going to the ER to get their care,” he said. “This is a very skewed risk pool with lots of people who have serious medical conditions.”

Insurers weren’t prepared for that kind of population, he said.

“If you don’t understand how to manage that, you’re going to get your head handed to you, and that’s what’s happened to a lot of insurers.”

California Healthline columnist and senior correspondent Emily Bazar joined the conversation to explain that Covered California’s 2017 rate hikes will average 7 percent for comparable mid-level plans.

For all plans, the statewide rate hike will average 13.2 percent, compared to about 4 percent in each of the last two years. Though that’s far less than the federal increases, some Covered California consumers still will face sticker shock. Exchange officials and consumer advocates have urged them to shop around to get the best deal.

The rate hikes “may not be as high as some other parts of the country … but they’re definitely high for us and will be high for certain individuals within California,” Bazar said.

She warned that “the averages are a little bit meaningless” because the rate increases for individuals depend on a variety of factors, including “which insurer you choose, whether you go for a PPO or an HMO, which region you live in, that sort of thing.”

You can hear the entire AirTalk segment above.