The 2017 ObamaCare rates are now being announced and it’s not pretty. California, which has enjoyed lower than average rates thus far, will soon be feeling the sting.
Robert Laszewski, healthcare insurance analyst, says last year California only had to endure a 4% rate increase while the national average was closer to 9%. But the two largest insurers have just announced rates that will bring California closer to the rest.
Blue Cross Blue Shield 2017 rates will increase an average of 19.9% and Anthem will raise their rates an average of 17.2%. According to the Los Angels Times, Covered California officials blamed the big increase on the “rising costs of medical care, including specialty drugs, and the end of the mechanism that held down rates for the first three years of ObamaCare.”
Laszewski says the first argument doesn’t hold water since the Milliman Medical Index, that measures the costs of medical care, reports that baseline medial cost rend was up 4.7% year-over-year – the lowest annual increase since Milliman first measured cost trends in 2001.
While it is true that the bailout provisions of ObamaCare end in 2017, it is also true that Congress suspended the health insurance tax under ObamaCare for 2017 – an action Laszewski says will offset the end of the reinsurance program for insurers. He says that insurance rates that are lower than average in one year will usually be adjusted in the coming years and end up about average.
He gives three reasons that the California rates were lower in previous years:
- Covered California canceled 1 million pre-ObamaCare policies unlike most states that grandfathered them in for a time.
- California insurers tended to go out for bigger 2014 rate increases than many other part of the country.
- California went to much smaller networks when ObamaCare first launched.
Furthermore, Covered California has argued they kept the average health plan profit to only 1.5% due to strict regulations. Yet the standard profit in the industry is usually 5%. Laszewski suggests this means California will be looking to increase that profit margin in the coming years – which means rates in 2018 will be even higher!
Savvy consumers looking to save money should be aware that the cost of health insurance varies in three ways:
- Higher premiums
- Higher deductibles and co-pays
- Narrower networks
If you save on one of these three, you’ll probably pay for it in the other two. You have to decide which of these three is most important to you.
A sample from the Covered California rates seen above shows that the lowest premiums are found in Medicaid-like plans such as Molina, Health Net, and LA Care. If a family of four goes to the cheaper Bronze plan, their individual deductible goes up – in 2016 the increase would have been from $2,250 to $6,000 while the family deductible would have gone from $4,500 to $12,000.
These skyrocketing rate increases will not be limited to California. With these high premiums and even higher deductibles, many Americans who thought they would be better off with health insurance now find they can’t afford to go to the doctor anyway. This is just more evidence that ObamaCare needs to be repealed and replaced with a system that is actually affordable – unlike The Affordable Care Act!