SACRAMENTO, California (AP) — After putting off routine health care for much of the pandemic, Americans are now returning to doctors’ offices in big numbers — a trend that’s starting to show up in higher insurance rates across the country.
Health insurers in individual marketplaces across 13 states and Washington D.C. will raise rates an average of 10% next year, according to a review of rate filings by the Kaiser Family Foundation.
That’s a big increase after premiums remained virtually flat for several years during the pandemic as insurers seek to recoup costs for more people using their policies, combined with record-high inflation that is driving up prices for virtually everything, including health care.
The rates review included Georgia, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, New York, Oregon, Rhode Island, Texas, Vermont and Washington.
“We’re at a point in the pandemic where people are using health care that they may have put off before,” said Larry Levitt, executive vice president for health policy with the Kaiser Family Foundation. “We have a double whammy right now of people using more care and inflation throughout the economy.”
In California, state officials announced Tuesday that rates would increase an average of 6% next year for the 1.7 million people who purchase coverage through Covered California, the state-operated health insurance marketplace. That’s a big jump after years of record low increases, when rate increases averaged about 1% in the past three years.
Increased use of health plans was the biggest reason for the increase, accounting for four percentage points, according to Jessica Altman, executive director of Covered California.
“That is really the consistent message that other states are seeing as well, and even more so than California,” she said.
That’s a small portion of the total number of insured Americans, as about 155 million people get their insurance through their employer-sponsored coverage. But Kaiser said the filings for the individual plans are more detailed and publicly available.
The annual open enrollment period for when customers can shop for and buy 2023 coverage starts this fall. That’s the main window each year when people on the individual market can buy coverage or change plans.
How much people will pay for coverage depends on a variety of factors, including where they live and what type of plans they choose.
The rate increases come as Congress debates whether to extend financial help for consumers through the American Rescue Plan — the $1.9 trillion economic aid package Congress passed last year to combat the economic impacts of the pandemic.
The American Rescue Plan included significant funding to keep health insurance premiums low for people who purchase coverage through state marketplaces.
California receives about $1.7 billion annually from that funding to make sure no one paid more than 8.5% of their household income on monthly premiums.
If that assistance expires at the end of this year, about 3 million Americans — including 220,000 Californians — would likely drop coverage because they will no longer be able to afford it, according to an analysis by Covered California.
Without guidance on whether Congress will extend the assistance next year, some insurers have reacted by proactively raising rates in anticipation of people dropping coverage. The uncertainty accounted for half a percentage point of California’s 6% increase, Altman said.
California officials have lobbied hard for Congress to extend the financial assistance through the American Rescue Plan. In general, the price of health insurance premiums depends on who is buying coverage. If its mostly sick people, the premiums are more expensive. If more healthy people buy them, the premiums cost less.
Altman said California has managed to keep its rate increases below the national average in part because more healthy people are buying coverage through Covered California than most other states.
She said that’s in part because of a California law that taxes people who refuse to purchase health coverage. But she said it’s also because of subsidies that keep premiums low so more people can afford them.
Altman said not extending the federal financial assistance would price some people out of coverage and “is the core outcome to be concerned about here.”
“That would be a big step backwards,” she said.
Associated Press health writer Tom Murphy in Indianapolis contributed to this report.
For the last two years, Syd Winlock has had a major burden lifted from his surgically repaired shoulder.
Federal subsidies passed as part of a temporary pandemic relief package have drastically cut how much he pays in healthcare premiums, allowing the Sacramento-area small-business owner to purchase an insurance plan during the last two years that provided better coverage for his shoulder and knee replacements.
Those federal subsidies, however, will expire at the end of this year if Congress does not extend the program. His “very manageable” price — about $700 a month for him and his wife — will increase to $2,300, Winlock said.
“Even if we went to a lesser-type policy, it would still be about $1,800 a month,” Winlock, 63, said. “I mean, that’s more than my mortgage.”
Roughly 150,000 lower- and middle-income Californians would be similarly priced out of coverage by the rising premiums if the federal subsidies are not extended, a Covered California analysis recently estimated.
The federal subsidies were passed in early 2021 as part of the Biden administration’s American Rescue Plan Act, which temporarily provided help to Americans to recover from the economic and health effects of the COVID-19 pandemic.
Under the act, health insurance premiums were capped at 8.5% of a household’s income. That significantly dropped monthly payments and led to more consumers signing up through Covered California, the insurance marketplace created by the 2010 Affordable Care Act for working-age people who aren’t covered by a health plan at their job.
Enrollment in the state’s exchange has hit a record-high 1.8 million, of which Covered California reported that 92% received some form of subsidy.
“These enhanced subsidies have fundamentally delivered affordability and delivered on the promise of the Affordable Care Act in the way that it was intended,” said Jessica Altman, executive director of Covered California.
“There were a lot of people who said things like, ‘Oh, my gosh, you know, for the first time I can afford my health insurance and my child care....’ This is particularly important given the inflationary environment we are in now.”
More than 1 million lower-income earners — individuals making between $17,775 and $32,200 and families of four with income between $36,570 and $66,250 — would see their premiums more than double if Congress doesn’t extend the program, according to the Covered California analysis. Monthly premiums for middle-income earners would increase, on average, by $272 per member next year.
John Baackes, the chief executive of L.A. Care, a health insurance plan serving Los Angeles County’s poorest and most vulnerable residents, said that although the enhanced subsidies don’t expire until the end of the year, the window for Congress to act is growing smaller because of its monthlong August recess. At that point, legislation typically slows down in an election year.
Baackes said health plans will need time to send renewal notices to consumers of anticipated rates for the 2023 coverage year, which are mailed in October.
“So we’re very concerned about it,” Baackes said. “The American Rescue Plan provided increased subsidies that are really a wonderful thing. And many of our members benefited from it.”
With open enrollment beginning one week before the Nov. 8 midterm elections, Democrats on Capitol Hill are increasingly eager to prevent consumers from receiving notices about huge increases in insurance premiums before voters go to the polls. But the debate about whether to extend the subsidies or — as some have pushed — make them permanent has been hamstrung by wrangling over the price tag and the effect on skyrocketing inflation.
Gov. Gavin Newsom and state lawmakers proposed spending $304 million in separate state healthcare subsidies to lessen the burden if the federal program is not extended. That money, which is included in a state budget that is expected to be finalized this month, would offset premium increases for more than 700,000 residents.
However, those state-funded subsidies will cover only a fraction of the federal premium discount currently available under the American Rescue Plan, which provided $1.7 billion to California in each of the last two years to help with healthcare costs.
“Nearly half of the folks in Covered California are paying less than $10 a month,” said Anthony Wright, the executive director of Health Access California, a consumer group that is pushing Congress to make the increased federal subsidies permanent. “We live in a high-cost-of-living state, so people will have to make decisions about how much healthcare they can afford.”
That worries Tuan Nguyen, a caregiver in the Silicon Valley city of Milpitas. Having been diagnosed six years ago with a rare and painful disorder called glossopharyngeal neuropathy, Nguyen said he has to buy more costly insurance coverage that allows him to see particular specialists.
“I need the healthcare plan,” said Nguyen, 44. “I need to see my doctor. I need my treatment. These are things that are a necessary part of my life, and they’re all very expensive and getting much harder to afford.”
Reducing the number of uninsured residents in the state has been a top priority for Newsom and legislative leaders, who in 2019 approved legislation creating a fee for anyone who does not have insurance. The individual mandate was intended to induce younger and healthier individuals to buy coverage through Covered California to widen the pool and lower rates overall as Democratic leaders move California closer to universal coverage.
As part of that effort, California has incrementally expanded eligibility for Medi-Cal, the state’s healthcare program for the poor, to certain age groups of low-income people regardless of immigration status. California’s pending budget would offer Medi-Cal to the final remaining age group in 2024, opening the healthcare program to residents 26 to 49 years old regardless of immigration status. Newsom said the move will make California “the first state in the country to achieve universal access to health coverage.”
Miranda Dietz, a research and policy associate at UC Berkeley Labor Center, said the significant increase in the number of Californians with health insurance over the last two years would be in jeopardy without the federal subsidies. Dietz co-wrote a study in partnership with the UCLA Center for Health Policy Research that projects that as many as 1 million people will forgo insurance in California next year if federal subsidies expire.
“It makes it so it’s very disheartening to take away these extra subsidies that have been really crucial in improving affordability for folks,” Dietz said. “It’s a real blow towards that goal of universal coverage and more affordable coverage.”
The added cost of premiums “will be a real struggle for folks who are deciding between rent and groceries,” Dietz said.
For Winlock, the small-business owner, the added cost if federal subsidies are not extended would be temporary. Next year, Winlock and his wife turn 65 and will qualify for Medicare. In the meantime, he would probably look for the cheapest plan possible and hope for the best.
“We probably would look at some alternative ways to get healthcare,” Winlock said. “We certainly wouldn’t be able to afford mainstream healthcare. It is just out of our budget.”
Times staff writer Jennifer Haberkorn in Washington contributed to this report.