For those living in California, health insurance will not change dramatically for the remainder of 2017. This is especially true for those who purchase their coverage Off Exchange directly with the insurance company without a federal premium subsidy.

Regardless of what occurs in Congress the plans, rates, and mandates will remain the same for 2017. The reason is that back in July of 2013, Governor Brown signed a law that established, in effect, a mirror image of the ACA (Obamacare) mandates such as the waiver of pre-existing conditions.

Even if Congress eliminated the various mandates of the ACA, state mandates would remain in effect for 2018, unless directly overridden by Congress. California would still require the wavier of pre-existing conditions as a condition of enrollment, along with the other mandates like Community Rating (rates based upon date of birth, zip code, and age bands for older individuals).

Looking at 2018, the forecast is murkier because of the uncertainty of which insurance carriers will continue to offer plans in California, and the rates for 2018 plans. Beginning in May insurance companies will begin submitting their 2018 rates to the Department of Insurance or Department of Managed Care (HMOs).

It is difficult to come to any conclusion other than rates will continue to increase in 2018. The only question is the percentage of increase. If Congress changes the federal premium subsidy or the direct payments to insurance carriers that reduce co-payments, deductible, and out of pocket costs of Covered California purchased plans, then the rates for Off Exchange plans will disproportionally increase to make up for the loss of premium dollars to the carriers.

To understand how the ACA Mandates affected rates in California (and throughout the US), a Milliman research study determined how certain mandates affected rates. The two greatest reasons for the increased rates were Guaranteed Issue (waiver of pre-existing conditions), and Community Rating (date of birth, zip code, age bands).

Milliman estimated that Guaranteed Issue was responsible for 15% to 30% of the increase, and Community Rating 19% to 35% of the increase. Therefore, 34% to 54% of rate increases beginning in 2014 were a direct result of the combination of these two mandates.

Congress has discussed the ability to purchase health insurance across state lines as one method of bringing more competition, and hopefully lower rates. However, purchasing health insurance across state lines has not really been considered by the insurance carriers doing business in California, not to mention the Department of Insurance. During recent conference calls with research analysts, the CEO’s of Aetna and United HealthCare both dismissed the idea of buying insurance across state lines because of the issue of provider networks, and how to set the rates in each state.

Assuming California will require its state mandates to be maintained by the insurance carriers, then it is highly unlikely that there will be any meaningful reduction in rates for the foreseeable future.

*Sources include a Milliman Research Study (2017), and other direct online sources.

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