SACRAMENTO – Covered California, the state’s health insurance exchange, announced today the participating health plans and proposed rates that will be available for individuals and families. This announcement provides tangible evidence of the individual market’s transformation under the Affordable Care Act (ACA) and reveals a competitive market that will offer consumers a wide range of health plan options and good value for comprehensive health coverage.
“Covered California is expanding access to health care by creating a new marketplace where Californians can easily comparison shop for new enhanced insurance products at competitive rates,” said Patrick Johnston, California Association of Health Plans (CAHP) president and CEO. “Over the past three years health plans have been working hard to implement federal health reform and ensure consumers have access to better health benefits and avoid financially crippling medical bills, and today that planning becomes real.”
Thirteen regional and statewide health plans will be participating in Covered California, providing Californians with a diverse selection of plans from which to choose. Among the plans available are some Medi-Cal plans that have not previously been available in the commercial market, smaller regional plans, national health plans and non-profits.
The new plans will go into effect on January 1, 2014, and will offer lower out-of-pocket expenses for deductibles and co-pays. Pre-existing conditions will no longer be taken into consideration, lifetime limits are eliminated and subsidies will be available for individuals earning up to $46,000 and for families with incomes of up to $94,200.
The individual market represents just 5.6 percent of the insured population, as three out of four Californians already receive coverage through their employers or the government. For those in the individual market, the ACA established health exchanges, new where they can shop for comprehensive benefits, beginning October 1, that will more closely resemble employer-provided insurance rather than the bare-bones coverage they may have had in the past.
The subsidies offered through Covered California will mean many moderate- and low-income Californians will pay less for coverage than they did before the ACA, and they will enjoy more comprehensive benefits. But those with higher incomes who do not qualify for the subsidies could see their premiums rise.
“The ACA is a balancing act, seeking to spread costs by enrolling the young and old, sick and healthy, lower and higher income earners,” Johnston stated. “The subsidies will also enable many Californians to pay less for more extensive coverage than they had before.”
Major changes to the health insurance market include:
Health plans will pay for a greater percentage of costs, and some out-of-pocket expenses will go down. Paying less out-of-pocket for co-pays and deductibles will mean higher premiums because the premiums will absorb more of the underlying cost of care.
Those who currently purchase individual insurance will now be buying a different type of policy – one that more closely resembles an employer-sponsored plan with more extensive coverage. The plans available in 2014 will have more comprehensive benefits and services than the “bare-bones” policies available in the individual market today. Californians in the individual market may pay more than they have before for the additional benefits – even if those are benefits they may never use, such as pediatric dental care for beneficiaries who have no children.
People can’t be denied coverage for pre-existing conditions, and they can’t be charged higher premiums for poor health status. The cost of health care for those with pre-existing conditions will be shared among everyone in the insurance pool.
Some young people will see their premiums increase. The ACA limits the amount by which health plans can vary premiums based on age. Currently, health plans may charge younger people up to five times less than what they charge older people because health care spending on young people is generally much lower. Beginning in 2014, older people can only be charged three times more than younger people.
Higher anticipated enrollment among older individuals means higher health care costs. Many individuals entering the insurance pool will be Baby Boomers, which will increase the average age of the insured population. Since people tend to need more health care as they age, total health care costs for everyone in the insurance pool will increase.
In addition to coverage mandates, the ACA places tight limits on health plan profits and administrative costs, requiring plans to spend at least 80 cents out of every premium dollar on medical costs. If they do not, they must issue rebates. California commercial plans exceeded that requirement by spending, on average, 89 cents out of every dollar in premiums on medical care in 2012.
Covered California is anticipated to announce health plans and rates for the small business market later this year.
More information on how plans will differ under the ACA is outlined in CAHP’s two new fact sheets: “101 Guide to the ACA” and “ACA: Understanding Subsidies”. For more information on Covered California, please visit CAHP’s dedicated web page or http://www.coveredca.com/.