California ACA premiums to increase 13.2 percent in 2017

Premiums for plans offered on the Covered California health insurance exchange will jump an average of 13.2 percent in 2017.

The rate hikes are higher than the 4 percent average increases in 2015 and 2016, and above the 8 percent increase estimated in the exchange’s proposed budget released in May.

Covered California’s announcement of 2017 rates tried to emphasize that customers should look at switching plans in order to avoid the largest increases.

“Shopping is going to be more important this year than ever before,” said Covered California Executive Director Peter Lee. “Almost 80 percent of our consumers will either be able to pay less than they are paying now, or see their rates go up by no more than 5 percent, if they shop and buy the lowest-cost plan at their same benefit level. That’s the power of shopping.”

The average rate hike for the lowest-priced plans will be 3.9 percent for bronze-tier coverage and 8.1 percent for silver. If customers choose to switch to the lowest-priced plan in the same tier, their premiums could be reduced by 1.2 percent, according to the exchange.

As for what’s driving the increases, Covered California blamed the continued rise in specialty drug costs and utilization, along with the end of the ACA’s reinsurance program. It also partially faulted the current special enrollment periods, saying it’s possible customers bought insurance only when coverage was needed instead of paying premiums year-round, a gap it aims to change by requiring extra documentation to qualify for mid-year enrollment.

The biggest hikes requested by individual insurers came from two of the state’s largest. Blue Shield of California asked for a 19 percent hike in premiums, while Anthem requested a 16 percent increase.

Unlike some states, which are seeing exchange options reduced to one or two insurers’ plans in some areas, 11 companies are signed up to offer covered through California’s marketplace next year.