Covered California Premiums Going Up 13.2 Percent Next Year. Here’s Why.

California's Obamacare customers can expect a hefty increase in their monthly health insurance premiums next year. Covered California will announce new 2017 rates Tuesday morning for people who buy their plan through the state marketplace, and experts are predicting that increases will be double or even triple what they were last year.

“2017 is going to be a transition year,” said Peter Lee, executive director of Covered California, testifying before Congress last week. “We expect our rates to be higher than we saw in our first two years.”

In 2015 and 2016, marketplace premiums increased an average of 4 percent – a rate celebrated by consumer advocates as “modest,” even “terrific.”

Covered California's proposed budget for 2017, released in May, projected average rate increases of 8 percent. Industry insiders are suggesting the average jump could be even higher.

There are three key reasons why.

One: Medical Costs are Up

Insurance companies say premium prices are going up, because medical costs are going up. Doctors, hospitals, labs, and pharmaceutical companies are all raising their prices.

“Unquestionably, runaway drug prices remain a serious problem,” said Charles Bacchi, president and CEO of the California Association of Health Plans, a trade group for insurers. “We're seeing new drugs coming out with blockbuster prices, and we've seen drugs that have been around for 30 years double and triple in price for no reason.”

Northern Californians have felt the burden of higher medical costs more so than people in Southern California because the hospital market is more consolidated, giving hospitals more bargaining power with insurers.

Early rate filings from other states indicate rising medical costs could contribute to premium increases anywhere from three to nine percent.

California regulators will have a chance to review the proposed rate increases, and consumer advocacy groups say they look forward Read More ...

Source:: Health