Covered California medical insurance to increase average of 5.2% in Sonoma County; 6% statewide

Insurance premiums in the state’s Covered California health exchange are expected to increase by an average of 5.2% in Sonoma County and 6% statewide.

The increases, announced Tuesday, are in part due to a return to pre-pandemic health care usage and the potential expiration of federal assistance from the American Rescue Plan Act, which runs out in December, Covered California Executive Director Jessica Altman said.

During the pandemic, the federal government beefed up subsidies to those who purchased insurance in the individual market through Covered California. Altman said if the American Rescue Plan Act is allowed to expire, 1 million low-income residents could see their premiums double, and 220,000 middle-income residents could end up dropping their coverage.

“That is, of course, in the backdrop of high inflation of other economic factors that are increasing costs for other household necessities like food, like gas, at a time when we know California's families are already facing difficult kitchen table decisions,” Altman said during a Tuesday teleconference.

Projected rate increases vary across 19 Covered California regions. Sonoma, Marin, Napa and Solano comprise Region 2, with a current enrollment of 59,780 health exchange consumers.

Covered California, the state’s health benefit exchange under the Affordable Care Act, offers discounts that allow eligible consumers to purchase name-brand private insurance.

Altman said the statewide average increase of 6% is below the national average of 10% among the 13 states, and the District of Columbia, that have thus far filed their rates. It is the largest increase since the pandemic started in 2020.

The years 2020, 2021, 2022 saw rate changes of 0.8%, 0.5% and 1.8%, respectively. The four-year average change between 2020 and 2023 is 2.3%.

Altman referred to the health exchange’s projected increase as “moderate” and a result of several factors, including aggressive negotiations with carriers. She added that the state is also home to one of the nation’s healthiest pool of residents, while record enrollment in 2022 brought the ranks of Covered California consumers to 1.7 million.

But Altman said the health care use and costs are returning to pre-pandemic levels. Two-thirds of the projected, statewide rate increase, about 4%, is due to higher utilization, with people once again seeking medical treatments that in some cases were put off during the pandemic.

Altman said the expiration of subsidies under the American Rescue Plan Act would have a significant impact on what consumers are actually paying in premiums. Under the Affordable Care Act, premiums were capped at 8.5% for individuals with incomes under 400% of the federal poverty level who purchase insurance through an exchange.

The American Rescue Plan Act eliminated that threshold, capping premiums for all who purchase health plans under an exchange at 8.5%. The increases people would see if the subsidies expire depends on their income levels, said Anthony Wright, executive director of Health Access, a statewide health care consumer advocacy group.

For example, in U.S. Congressman Mike Thompson’s 5th District, 28,734 people who purchased health plans through Covered California receive subsidies under the American Rescue Plan Act. Their average monthly premium is $126, but the elimination of the subsidies would increase that monthly payment to $241.

In U.S. Congressman Jared Huffman’s 2nd District, 33,400 Covered California enrollees receive Covered California subsidies through the American Rescue Plan Act. Their average monthly premium is $123 and elimination of the aid would bump that up to $256.

Without the Affordable Care Act subsidies, the average monthly premiums for the 5th and 2nd district residents is about $700 and $717, respectively, Wright said.

On average, for those whose incomes are four times the federal poverty level — and receive no subsidy under the Affordable Care Act — the loss of the American Rescue Plan Act assistance for North Bay residents buying plans through Covered California means a financial blow of more than $4,000 a year, Wright said.

“That’s real money,” he said. “If you're over 400% of poverty level, you are making $50,000 (a year) for an individual, over $111,000 for a family of four — but still, $4,000 is real money.”

The American Rescue Plan Act ensures that households pay no more than 8.5% of their household income on their health plan premiums if they enroll through an Affordable Care Act marketplace.

The American Rescue Plan Act subsidies in California total $1.7 billion. Altman said that if the subsidies are not extended, the state would try to backfill some of the losses using a fund of $304 million the governor and legislators allocated in the most recent budget.

“That would only be a fifth of what we had,” Wright said. “We really want the congressional money to be (extended). And then that allows us to use (state) affordability funds to provide better help with cost sharing, to eliminate deductibles, things like that.”

A plan to extend the American Rescue Plan Act subsidies is currently in an economic plan being debated in Congress that would limit pharmaceutical prices. Wright said the cost of extending the subsidies would be paid for by savings in drug prices.

“We are expecting a vote in the next week or two — our hope is by the end of July or the first week of August, but it’s likely to be a party-line vote,” he said.

You can reach Staff Writer Martin Espinoza at 707-521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @pressreno.