Covered California announces 2019 rates

Covered California announced an average 8.7 percent rate increase for 2019 on Thursday.  The exchange explained that though the increase is modest, it is due in large part to the impact of the recent federal policy change that eliminated the enforcement penalty for the individual mandate which is predicted to raise costs in several markets.

While subsidized customers on the exchange will be protected from the rate increase because their subsidy will also increase, unsubsidized customers will bear the brunt of the increase.  Covered California Executive Director Peter V. Lee explains,

“The cost of the penalty removal will manifest for unsubsidized consumers in higher rates. While subsidized people will not bear the full costs, taxpayers will. The additional losers from this policy change will be those who decide to roll the dice, go without coverage, and end up with hundreds of thousands of dollars in medical bills.”

With the relatively modest size of the increase Covered California suggests that many customers can adequately mitigate the additional cost by switching to the lowest-cost plan in their tier, though as Lee suggests  some may choose to drop coverage altogether. Covered California estimates that the elimination of the individual mandate penalty could reduce enrollment in California’s individual market by 262,000 consumers in 2019.

Despite the anticipated drop in participants, California’s high coverage rates and overall health have contributed to a fairly stable market compared to many states.  According to a Kaiser Family Foundation report, Washington State faces an average individual market rate change of 19.08 percent while Maryland faces average increase of over 30 percent. Says Lee,

“In California we have 1 million unsubsidized consumers in the individual market, and while they will be protected from significant rate changes because of the positive effect of marketing and a competitive environment, we are worried that the rest of the nation is seeing millions of people at risk of being priced out of coverage,”

Covered California customers can find out their specific plan rate changes for 2019 during their renewal period in October.