Covered CA announces record-low rate change for individual market

In a press conference on Tuesday, Covered California Executive Director Peter V. Lee announced a record-low insurance premium rate change for California’s individual market. The preliminary average rate change for the upcoming 2021 plan year is 0.6% — an even smaller increase compared to last year’s record-low 0.8% increase.

Lee says the low rate change was driven by several new state policies and investments. One policy is the statewide reinstatement of the individual mandate that went into effect in 2020. The federal individual mandate penalty was reduced to zero dollars in 2019, after which new enrollees dropped 24% in California. During that year, California saw a premium increase of nearly 9%.



Lee also says new state subsidies and California’s investment into marketing and outreach all played roles in increasing enrollment and creating one of the healthiest consumer pools in the nation.

“California continues to show the nation what can be done when you build on and strengthen the Affordable Care Act,” said Lee in a statement. “California’s bold policies to provide additional state financial help, to reinstate the penalty to encourage consumers to enroll in health care, and to make significant marketing investments in Covered California are providing stability and lower costs in the face of national uncertainty.”

This year, Covered California saw a 41% increase in new enrollees. The new enrollees were also “substantially healthier” than the people who were already enrolled, said Lee.

“A substantial contributor to the lower costs is the fact that the new people we signed up were about 5% cheaper, less cost than the people that are already signed up,” he said.

Increases in health care costs also had an impact on the rate change. Absent the impact of COVID-19, health care costs are projected to increase 4-8% for 2021. While there is uncertainty about the impact of the pandemic on health care costs, Covered California says “the latest information shows that health care costs will likely end up being close to what was originally priced for in California.”

Average rate changes varied by plan and region. Region 7 (Santa Clara County) and Region 10 (San Joaquin, Stanislaus, Merced, Mariposa, and Tulare Counties) show the largest rate increases at 5.6% and 4.2%, respectively.


Image: Covered California


Southwest LA County (-2.1%) and Mono, Inyo, and Imperial Counties (-2.6%) had the largest decreases in rates.

“One of the things we see right now is that generally, Southern California rates went up less, and in many cases went down, compared to rates in Northern California that went up a couple percent. We credit that largely to the fact that there’s more competition in Southern California,” added Lee.

Rate changes also varied by plan with Valley Health Plan (9%) and Oscar Health Plan of California (7.6%) showing the largest increases. LA Care Health Plan (-4.6%) and Molina Healthcare (-3.8%) saw the greatest decreases.


Image: Covered California


The preliminary rates have been filed with the Department of Managed Health Care and the Department of Insurance for final reviews.