California's state-run health insurance exchange, Covered California, announced that premiums are set to increase 4 percent statewide, which the federal government hailed as a sign the Affordable Care Act is working as intended.
California--which is among only a few states that actively negotiates prices--has enrolled 1.3 million residents since the opening of its exchange, reports the New York Times. Covered California Executive Director Peter Lee said in a statement that the low rates are thanks to his state's large number of enrollees and their relative good health.
"This is another year of good news for California's consumers and further evidence that the Affordable Care Act is working," Lee said. Covered California spent weeks negotiating with insurers, something referred to as "active purchasing," Lee recently said at a briefing on Capitol Hill.
California's modest rate hike "shows what a stable, competitive individual insurance market can look like," Larry Levitt, senior vice president of the Kaiser Family Foundation, told Kaiser Health News.
The announcement "demonstrates that the Affordable Care Act is working as intended to spur competition and transparency in the marketplaces, keeping premium increases low and leading to affordable new choices for consumers," Kevin Counihan, CEO of Heathcare.gov, said in the Centers for Medicare & Medicaid announcement. Counihan recently sent a letter to state insurance commissioners asking them to re-examine proposed rate increases for next year.
Unlike other state-run exchanges, or even the federal exchange, California standardized coverage by capping specialty drugs at $250 per prescription per month, FierceHealthPayer previously reported. Additionally, every silver plan in the state must be designed the same way, with the same benefits, KHN adds.
Covered California will see two new payers this upcoming open enrollment period--UnitedHealth and Oscar Insurance--bringing the total number of insurers on the exchange to 12. The exchange had previously rejected UnitedHealth's bid to sell plans on the exchange partly because the insurer had been known to sell bare-bones plans to employers.
However, there is some variation in rates throughout the state. For instance, in Southern California, consumers who keep their plan will experience an increase of only 1.8 percent, whereas those in Northern California--where healthcare costs are higher due to greater consolidation among providers--will experience an increase of 7 percent, notes KHN.