Despite Anthem’s pullback, outlook remains sunny for Covered California

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More than 82% of the Covered California's current enrollees will be able to choose from three or more carriers in 2018, and more than 95% will have at least two options.

Covered California premiums are expected to rise an average of 12.5% in 2018, and all 11 of the exchange’s insurers are set to return. But one of those insurers—Anthem—will significantly reduce its presence in the state.

Anthem will exit 16 of the state’s 19 rating areas next year, according to Covered California’s annual report, which details preliminary rates and plan offerings. The three rating areas in which it will continue to sell plans comprise 28 counties.

“The deterioration of the individual market, uncertainty regarding cost-sharing reduction subsidies and the restoration of taxes on fully insured coverage are just some of the factors that have led to an increasing overall lack of predictability that simply does not provide a sustainable path forward to providing affordable plan choices for all California consumers,” Anthem said in a statement.

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Anthem has already exited the exchanges in Ohio, Indiana and Wisconsin, and has significantly scaled back its presence on the Nevada exchange.

Despite Anthem’s service reduction in California, though, more than 82% of the exchange’s current enrollees will be able to choose from three or more carriers in 2018, and more than 95% will have at least two options. Many of the health plan options available next year are EPOs and HMOs—with the exception of plans offered by Blue Shield of California, which will offer a PPO plan in all of the state’s rating areas.

In terms of premiums, the weighted average increase of 12.5% in 2018 is lower than the 13.2% average rate hike this year. The biggest factor driving premium increases in 2018 is medical cost trend, the report says, but other influences include “current uncertainty in the market” and a one-time adjustment for implementation of the ACA’s health insurance tax, which adds 2.8% to the rate change.

In its report, Covered California notes that it took several steps to stabilize the individual market given the uncertainty surrounding the future of cost-sharing reduction payments. It said it will add a surcharge of the amount needed to cover the costs of the CSR subsidy program to health plans’ on-exchange silver-tier products. To compensate, though, enrollees will receive a larger advanced premium tax credit to help offset the silver-tier CSR surcharge.

The CSR surcharge, California Insurance Commissioner Dave Jones said Tuesday, would add a 12.4% increase to silver-plan rates on top of the 12.5% increase—essentially doubling the rate hike.

"We in California are doing everything we can to keep carriers and plans in the individual market, but President Trump continues to undermine the ACA and as these rate filings demonstrate, California is not immune to his efforts to wreck the Affordable Care Act.”