Double-digit rate increases coming for those in region with Covered California health plans

Consumers who have Covered California health plans in the Northern San Joaquin Valley will experience sticker shock in 2016 rather than the modest premium increases reported in other areas of the state.

On average, the premiums for health plans purchased under the Affordable Care Act will increase 10 percent in the pricing region that includes Stanislaus, San Joaquin, Merced, Mariposa and Tulare counties, the state exchange said.

The proposed rates for certain health plans offered in the region will increase by as much as 32 percent, mirroring the sharp increases seen in other states where insurers are asking for 20 to 40 percent higher premiums for Obamacare insurance policies.

In California, the premium increases in the third year of coverage under federal health reform will average 4 percent. News agencies and industry groups such as the California Association of Health Plans said the Covered California marketplace had avoided sticker shock and maintained lower rates for consumers.

But that has not been the experience for Dennis Nasrawi of Modesto. He said insurance costs for himself and family members are higher than when the Affordable Care Act was signed into law in 2010.

“It is just going to go up, and we are going to be paying more,” Nasrawi said. “Unless you are eligible for a subsidy, you are paying more than you did five years ago.”

During a news conference Monday, reporters asked why the premium increases would be three times the state average in Santa Cruz County, and why Fresno County would see only a 3.3 percent hike, when its population is similar to that of Merced and Stanislaus counties, which will see double-digit increases.

Covered California Executive Director Peter V. Lee said the premiums were generally lower in Southern California, where there is more competition among hospitals and health care providers. Historically, there has been more health industry consolidation in Northern California, raising health care costs and making it tougher for insurers to negotiate contracts with large health systems, Lee said.

In addition, some smaller counties have fewer doctors and medical facilities. The premium spikes in places like Stanislaus and Santa Cruz counties were not due to Affordable Care Act policies, Lee said.

This year, about 68,000 people in Stanislaus, San Joaquin, Merced, Mariposa and Tulare counties renewed their coverage or signed up for Covered California health plans. According to the exchange, 70 percent were enrolled with Anthem Blue Cross; 21 percent with Kaiser Permanente; 9 percent with Blue Shield; and less than 1 percent with Health Net.

Starting in January, the premium increases are expected to average 11 percent for those with Anthem coverage; 13 percent for Blue Shield plans; 5 percent for Kaiser; and 4 percent for Health Net. Blue Shield is proposing rate hikes ranging from 10 to 32 percent.

The proposed premiums were negotiated between Covered California and the 12 insurance organizations that offer plans on the exchange. The rates are subject to a 60-day review by the state Department of Managed Health Care.

Almost 90 percent of the 1.3 million Californians with Obamacare insurance receive an income-based tax subsidy that lowers their premiums. With the subsidy, the average premium for the most popular plan will increase from $105 a month to $118 a month in the Northern San Joaquin Valley.

A 40-year-old adult who’s not eligible for a subsidy will pay $320 a month for a Silver Anthem plan; $380 per month for a Blue Shield Silver plan; $402 a month for the comparable Health Net plan; and $334 a month for the Kaiser Permanente plan.

Residents in the five-county pricing region will have a choice of at least two insurance companies, and those in Stanislaus and San Joaquin will be able to choose from four. Covered California added UnitedHealthcare Benefits Plan and a second company to its marketplace, but those insurers will not offer plans in the Northern San Joaquin Valley.

Lee said consumers in Stanislaus and nearby counties can reduce the impact of higher rates by shopping for the lowest-cost plan in the same tier. (Covered California plans are available in Bronze, Silver, Gold and Platinum tiers, with coverage levels for medical bills ranging from 60 to 90 percent.) The exchange estimated premium increases in the region will average 6.5 percent for people who shop around.

A shop-and-compare tool at www.coveredca.com will be available Aug. 3 to assist customers with finding other options. Consumers should know that a change in insurance coverage could require them to change doctors or use a different hospital, officials said.

Blue Shield of California did not return a call to explain its sharp rate increases in Stanislaus and nearby counties.

During contract negotiations seven months ago, Blue Shield charged that Sacramento-based Sutter Health was able to raise prices for medical services by controlling health care markets in Northern California. The parties agreed to terms of a new contract in January to replace one that expired Dec. 31, giving people enrolled in Blue Shield plans access to Sutter facilities, such as Memorial Medical Center of Modesto and Sutter Gould clinics.

Sutter spokeswoman Karen Garner disagreed that a lack of competition was driving up insurance rates in Northern California. “Consumers have many provider choices, as do health plans and employers,” Garner said in a statement. “In the greater Sacramento and San Joaquin Valley regions, consumers may choose from multiple health care systems (including Dignity Health, Kaiser, Sutter, Tenet Healthcare and UC Davis Health System.)”

Garner said average overall rate increases for health plans have been held to the low single digits for the past several years.

Ed Persike, owner of Persike Benefit Solutions of Modesto, said the premium increases in Stanislaus County are higher than the state average because “we do not have hospital competition. Memorial is high-priced, and Doctors Medical Center is just a little lower.”

The cost of drugs also is driving insurance rates higher everywhere, especially high-cost drugs for treating hepatitis C and other diseases, Persike said. “If you have drug addicts that start demanding payment for care for hepatitis C – as is their right under the law – it is an $80,000 cure,” he said. “You will see the governmental insurance go through the roof.”

This story was originally published July 27, 2015 at 2:26 PM with the headline "Double-digit rate increases coming for those in region with Covered California health plans."