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.
Hundreds of thousands of public workers, early retireesm and school employees in New Jersey are facing potential rate increases of as much as 24% for health benefits under proposals being considered by the State Health Benefits Commission.
Rate increases being considered include a 24% increase for medical and a 3.7% increase for pharmacy benefits for active public workers, as well as a 15.6% increase in medical and a 26.1% increase in pharmacy benefits for public workers who retired before the age of 65, according to an email sent to county administrators from New Jersey Association of Counties Executive Director John Donnadio.
Donnadio said in the email that the figures, which haven’t been made public, were shared by an insurance and benefits broker.
StateTreasury spokeswoman Jennifer Sciortino acknowledged rate increases were being considered and added that rates for active members and early retirees would likely increase between 12-20% across the various plans for the upcoming year.
A vote to approve the rate increases was scheduled for Monday, but the state health benefits board and the Division of Pension and Benefits postponed the vote after acknowledging during a public meeting on July 13 that more time would be needed to address questions and concerns, Sciortino said.
“As has been the official process for many years now, the presentation materials provided to the State Health Benefits Program and School Employees Health Benefits Program Commissions last week are confidential until the rates are finalized,” Sciortino said.
The New Jersey League of Municipalities on Wednesday sent an email urging members to contact their representatives and the governor’s office, prompting a public outcry from state and local governments, as well as Democratic and Republican state lawmakers.
“This is a staggering increase that will saddle taxpayers, public sector workers and educators with higher costs at a time when we are all contending with inflationary pressures and a possible recession,” state Senate President Nicholas Scutari, D-Union; Senate Majority Leader Teresa Ruiz, D-Essex and Senate Budget Chairman Paul Sarlo, D-Bergen, said in a joint statement.
The Democratic state senators urged the board to reject the proposal and called on New Jersey Treasurer Elizabeth Muoio to use her authority to block the planned approval “and make sure a full accounting of the finances of the two health benefits’ plans is made public and fully discussed.”
Republican leadership in the state Legislature on Thursday called for the creation of a special legislative committee to investigate Democratic Gov. Phil Murphy’s administration for a “failure to control health care costs for public employees, retirees and taxpayers.”
“The 24% premium increase proposed for most active employees will take thousands more out of their paychecks annually and lead to huge costs for local governments that will translate into higher property tax bills for struggling families,” state Senate Republican Leader Steven Oroho, R-Sussex, said in a statement. “We must investigate the failures that led to these catastrophic premium increases to develop an effective plan going forward.”
The proposed rate increases shine a new spotlight on allegations that the Murphy administration squashed an attempt to recover $34 million the state paid to Horizon for a cost savings program that outside consultants found “yielded no apparent savings,” according to a report from Bloomberg.
Horizon administers health care plans for state and local government employees and retirees in New Jersey.
“It’s absolutely scandalous that high-level administration officials would intercede to prevent Horizon from being held accountable as premiums are set to skyrocket,” Senate Republican Budget Officer Declan O’Scanlon, R-Monmouth, said in a statement. “Employees, retirees, and taxpayers deserve to know why.”
Sciortino said several “extraordinary factors” are affecting rates for the coming year, including higher utilization of medical services during the COVID-19 pandemic and a return to normal services and procedures that had been previously postponed.
Those factors are being compounded by rising prices amid historic inflationary pressures that have increased health care costs nationwide.
“While there is significant volatility in health care trends, the rate increases for the State plans are in line with rate increases that our consultants’ other clients are experiencing and are also being reported nationwide,” Sciortino said. “We believe that these circumstances are an anomaly, rather than the norm, and we believe that it is more likely than not that utilization and costs will normalize.”
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