2016 California Health Insurance Rates: Why Affordable Care Remains a Question

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Covered California just released their preliminary rate report for 2016 – and the increase is really low. Good news, right? Maybe. But consumers aren’t out of the woods yet. With millions of Californians still unable to purchase coverage, the problem of affordable healthcare remains to be solved.

Rate increases: How low is low?

“California’s Obamacare exchange negotiated a 4 percent average rate increase for the second year in a row, defying dire predictions about health insurance sticker shock across the country,” said Chad Terhune of the Los Angeles Times.

That’s quite low for the industry. To be fair, it’s just an average, so there is some variance. In Orange County, Terhune said, rates are increasing by less than 2 percent, while in Northern California, they’re rising at 7 percent. Still, even at the top of that spectrum, the numbers are very modest – especially as health insurance companies across the nation continue to seek increases of 20-40 percent.

But it’s not all about the rates

Rate increases may be low, but for many consumers, the cost of coverage is still prohibitive. Even with government subsidies provided under the ACA, health insurance remains out of reach for millions of Californians.

Among the currently-uninsured, Kaiser Family Foundation found that 34 percent didn’t enroll because they couldn’t afford it. An additional 15 percent fell through the gap: They couldn’t afford coverage and didn’t qualify for assistance. UC Berkeley Labor Center predicted that by 2019, between 2.7 and 3.4 million Californians will remain uninsured.

Even for those who do have coverage, healthcare may still be inaccessible. It’s one thing to pay your premium each month; it’s quite another to pay a high deductible. For those who are barely scraping by with a Silver or Bronze plan, shelling out hundreds or even thousands for an injury or illness is out of the question. As a result, some Californians who can afford a plan cannot afford to use it.

Too much, and not enough

Barely-affordable premiums, with bare-bones coverage – that’s a tough combination. But it gets tougher. Low-cost, catastrophic plans offer limited provider networks, which makes it difficult for low-income Californians to find a doctor.

As for the future, two words come to mind: carrier consolidation. If and when the Big Five become the Big Three, it’s not unrealistic to expect even higher premiums and smaller networks. Without as much market competition to drive down rates, and with only a handful of carriers to choose from, consumers may find themselves in a sticky situation indeed.

How to make health care affordable?

The goal of the ACA was to make care affordable. But legislation is not a magic wand. The question remains, how?

We have a few ideas on that topic. Read our recent article on carrier consolidation to find out what’s coming down the pike, then learn what you need to know about the high cost of healthcare in our four-part series that includes thoughts on chronic diseases, pricing transparency, the employer-employee disconnect, and perverse incentives.

Finally, bear in mind that the best way to keep your personal healthcare costs down is to stay healthy. Check out our favorite fitness and wellness apps for your smartphone: get the infographic.

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