The Los Angeles Times reported that the rates of Affordable Care Act (ACA) plans on California’s federal marketplace are set to experience an average increase of 13.2% next year. In particular, the state’s two largest insurers on the marketplace—Anthem and Blue Shield—will see the biggest increases at 17.2% and 19.9%, respectively.
The sharp increase in rates is over three times that of previous increases in the last two years,
The Los Angeles Times observed.
Both Anthem and Blue Shield are the largest insurers on Covered California, California’s federal health insurance marketplace.
According to a statement from officials, the premium hikes set for next year are due to the rising costs of medical care, as well as due to the end of a “mechanism” that kept rates down for the first three years of the ACA.
That mechanism Covered California officials mentioned in passing was the health insurance tax system under the ACA. Through the tax system, insurers could tap into a reinsurance program that could help them offset the costs of taking in high-risk patients through the ACA marketplace. With Congress having suspended the tax system for next year, insurers no have no choice but to raise their rates to compensate.
Forbes corroborated Covered California’s claims of increasing health costs by citing the Milliman Medical Index published late May. The report indicated that baseline medical cost trend was up 4.7% year-over-year, which is the lowest annual increase since Milliman first started tracking cost trend in 2001. The report also accounted for the cost of specialty drugs.
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