AP California News
By JUDY LIN
Jul 27, 2015 – 9:14 PM EDT
SACRAMENTO, Calif. (AP) — The cost of private individual health plans on California’s state-run market will increase about 4 percent for the second straight year, evidence the strategy of forcing insurers to compete is controlling costs, program officials said Monday.
The average premium will rise 4 percent in 2016, a slight decrease from the 4.2 percent jump in 2015, said Peter Lee, executive director of Covered California.
The average increase in Southern California is 1.8 percent, for a total of $296 a month, compared to 7 percent, or a total of $384 a month, in Northern California. Southern Californians can get better rates because the region has more provider competition.
The exchange also added two new participants for the first time – UnitedHealthcare, the nation’s largest health insurer, and a New York startup called Oscar.
Lee said California’s 2016 rates are proof that the Affordable Care Act is working in the state. He credited California’s aggressive approach on haggling with insurers.
“The health plans know that if they price their products too high and consumers know it’s too high, because it’s an apples-to-apples comparison, they will not get enrollment,” Lee said in an interview.
The announcement was applauded by consumer groups and health advocates.
“While any increase in premiums may be hard on family budgets, this relatively small jump means California made sound decisions in establishing the structure and powers of the exchange and requirement that all plans meet Affordable Care Act standards,” said Betsy Imholz of Consumers Union, the advocacy arm of Consumer Reports.
Larry Levitt of the nonpartisan Kaiser Family Foundation said Covered California appears to be gaining momentum with several major insurers jockeying for market share and substantial enrollment. It’s unclear how the rest of the private market will look yet, he said.
“This shows how a stable, competitive individual insurance market can work,” Levitt said.
One of the main goals of President Barack Obama’s health overhaul was to slow increases in health care costs and premiums.
There had been some concern that some insurers around the country were requesting rate increases above 10 percent, saying their new customers turned out to be sicker than expected.
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