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Tuesday, August 16, 2022

Cover California to increase insurance rates

Ana B. Ibarra. By , CalMaters

Officials in Covered California announced today that premiums for health insurance plans sold through the state market will increase by an average of 6% next year.

This rate increase is the biggest increase California has seen since 2019. Over the past three years, insurers had kept the average growth at less than 2%.

Rate changes vary by region.

When premiums increase, so does a person’s financial support. Aid is based on household income, so subsidies may offset some of the increase. But those who do not qualify for the subsidy will bear the full cost of the rate hike.

“What are the costs of premium health care, how do they vary across geographies and communities, how are healthcare costs rising over time, which we know are already very high and increasing in this country, said Jessica Altman, executive director. Cover California.

She notes that California’s rate hike is still lower than other states. A recent Kaiser Family Foundation analysis found a 10% average premium increase offered by 72 insurers in 13 other states.

Altman said, the rate increase is largely attributed to people resuming doctor visits and procedures that they postponed during the peaks of the COVID-19 pandemic. There is also the cost of general inflation.

However, about one percent of the increase is attributable to the potential loss of increased subsidies from the federal government, which are due to expire later this year. Without additional support, people would pay more for their premiums, possibly prompting younger, healthier people to give up their coverage. And when healthy people leave the market, the premium goes up for everyone.

The federal government’s US rescue plan last year provided nearly $3 billion designated for two years of additional financial assistance to California through Covered California. The new law helped people further reduce the payment of their monthly premiums, allowing more people to sign up for health insurance. It also expanded who was eligible for savings to include middle-income individuals.

Currently, 1.7 million Californians purchase their coverage through the state’s Marketplace. Covered California estimates that if Congress doesn’t renew the American Rescue Plan subsidy, about 1 million people will see their premiums double and about 220,000 will drop their coverage.

“The (rate increase) for the subsidized population is almost divorced from what they pay out of pocket. What is more important is what happens with the (US rescue plan) subsidies,” said Christine Eibner, a senior economist at the RAND Corporation, a think tank.

Altman said the sooner Congress acts, the better its chances of avoiding consumer confusion in the fall. Covered California typically sends out renewal notices for enrollments beginning in October before the sign-up period, and until then it’s important for folks to have clarity.

World Nation News Desk
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