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Covered California recently (July 27, 2015) announced insurance premiums for individual health insurance policies to be applicable in 2016. Rates will increase an average of 4.0 percent compared to 2015. This rate of increase compares favorably to the 4.2 percent increase from 2014 to 2015, and to the double digit annual increases that prevailed before the appearance of the Affordable Care Act and Covered California. These rates will apply to the approximately 1.3 million Californians who have obtained individual health insurance policies in the Covered California marketplace. They do not apply to persons insured through group policies with their employers.

The announced 4 percent rate increase is a statewide average. Some consumers will face higher increases, some lower. About 30,000 consumers, representing 2 percent of the Covered California market, will see rate increases of 15 percent or more. Most of these more substantial  increases occur with policies in the higher end gold and platinum tiers. On the other hand, about 20 percent of those insured in the Covered California individual marketplace will actually be in line for a rate decrease. Southern California consumers will face average increases of only 1.8 percent, whereas Northern Californians will see average increases of 7 percent. The relatively higher increases in Northern California are generally explained by the greater market clout of more concentrated physician networks and hospital networks in that region. Increases in San Francisco, with its large number of hospitals, will average only 3.4 percent. 

If you are already insured through the Covered California individual health insurance marketplace it is very important that you compare your existing coverage and rates to the new rates for 2016. Covered California states that its consumers will be able to reduce their premium rates by an average of 4.5 percent if they shop around for lower cost plans in the same coverage tier (bronze, silver, gold or platinum). You will be able to change policies only during the open enrollment period which begins on November 1. Please do not fail to take advantage of this opportunity. Consumers will be able find the new rates for 2016 at the Covered California website, www.coveredca.com, beginning on August 3, 2015. 

Covered California also announced that in addition to the ten insurers who are currently participating in the Covered California marketplace, two new insurers will offer policies and compete for California insurance business in 2016. UnitedHealth Group, Inc., the largest insurer in the country, will offer policies in Northern California, and Oscar Insurance Corp, a New York start up, will offer policies in Los Angeles and Orange counties. 

Unlike the arrangements in some other states, Covered California actively negotiates rates with participating insurers. (The rates just announced are those negotiated for 2016 between Covered California and each of the participating insurance companies. These rates are subject to review and approval by state insurance regulators through September). Through the course of these negotiations Covered California claims to have cut $200 million off of the rates initially proposed by the insurers. This amount represents savings to consumers and to all federal taxpayers - since about 90 percent of all Covered California consumers receive premium subsidies in the form of tax credits.   

If you have questions about how the Covered California marketplace works -- whether you are currently insured in that market or not -- please contact Pfeifer Insurance Brokers. We have closely followed the Covered California marketplace since its inception, and are thoroughly familiar with its products and operations. We can also help you figure out whether you will be entitled to a federal subsidy to help pay your premium costs, and if so, how much that subsidy would be. 

Alex Pfeifer 
Pfeifer Insurance Brokers
650 762-8087

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