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For 2018 Health Insurance Trends in California.

For 2018 Health Insurance Trends in California.
August 09
07:46 2017

Covered California has just released their health insurance rates for 2018. Consumers can finally get an idea of what to expect for the coming year. The American Health Care Act, aka Trumpcare, has failed to pass the Senate and its future looks dim. The AHCA was truly a budget bill that targeted cuts to Medicaid, tried to restructure the tax-credits based on age versus income, and honestly was a hastily created bill that was found to be undesired by the majority of Americans.

Now that the AHCA isn’t coming to fruition anytime soon, we can finally focus on what will happen across California in 2018. The good news is that all 11 insurers in California for 2017 are still participating in California for 2018. Californians can still expect to have a good level of choice in terms of insurance carriers compared to many other states. Some state counties across the US have only one insurer in a given county. In Tennessee, for example, there are some counties without a single insurer to cover the residents. With that said, the insurers in California and on the state exchange, Covered California, are still alive and well in 2018.

Premiums are still increasing in 2018 by a weighted average of 12.5% compared to a 13.2% increase in 2017. The increases are more concentrated in Northern California where there are less provider choice and a higher cost of living. Part of the increase is a 2.8%, one-time increase due to the end of the “holiday” tax on insurers. As of the writing of this article, it is still uncertain if the Silver metal plan Cost Share Reduction or CSR program for those that earn between 139-250% will be federally funded in 2018. The CSR program has helped those who earn just over the Medi-Cal income limit to find plans with cost reductions to the co-pays, deductibles, and to the out-of-pocket maximum.

One major change for the southern California area is the removal of Anthem from the region completely. As a matter of fact, Anthem is only participating in 3 of the 19 price regions across California in 2018, cutting 59% of their current members. Anthem has already had some major changes within the SoCal area in the last year, from switching to an EPO or Exclusive Provider Organization from a PPO or Preferred Provider Organization that its customers were already accustomed to. Blue Shield (part of Anthem Blue Cross) is still the only PPO carrier available in all regions of California. Health Net offers PPO plans in Los Angeles, Orange County and San Diego County with competitively priced plans. Oscar’s EPO is expanding into East Los Angeles in 2018 while Kaiser, LA Care, and Molina Healthcare are still offering affordable HMO options throughout Los Angeles.

PricewaterhouseCoopers (PwC) has pointed out that medical cost increases across the US have been related more to medical prices versus an increase in utilization. That is very interesting when we reflect on the fact that California’s number of uninsured has dropped significantly from 17.2% in 2012 to 7.1% in 2016. That may have some merit as the law of large numbers has helped insurers better calculate rates and understand their accepted risks.

If we look at what is driving costs, PwC suggests inpatient and outpatient care are about 59% of overall medical costs. Physician costs as a share have steadily dropped to 29% from 35% which suggest doctor visits have been more cost-effective. If we look at pharmaceutical drug costs, they have gradually become a bigger part of our medical costs, increasing from 15% in 2008 to a projected 18% in 2018.

With all of this information, we should all focus on the bigger picture. The Affordable Care Act is still the law of the land. We still have the ability to choose our provider networks and primary care doctors. Premiums are naturally going up with medical advancements and inflation while healthcare is becoming a bigger priority in the political and social arenas. State subsidies are still intact for the poor and middle class. Medi-Cal remains here for the poor, disabled, kids, and even for the retired. Our current system has proven to work; however, much more can be done.

I hope this information has helped you plan for the coming year.

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