August 5, 2015

Covered California Proposed Rates to Increase by Only 4 Percent in 2016

Covered California Proposed Rates to Increase by Only 4 Percent in 2016

The Centers for Medicare & Medicaid Services (CMS) issued a final notice establishing the methodology for determining federal funding for the Basic Health Program in program year 2016. The Basic Health Program provides states with the option to establish a health benefits coverage program for lower-income individuals as an alternative to Health Insurance Marketplace coverage under the Affordable Care Act. This voluntary program enables states to create a health benefits program for residents with incomes that are too high to qualify for Medicaid through Medicaid expansion in the Affordable Care Act, but are in the lower income bracket to be eligible to purchase coverage through the Marketplace. This final notice is substantially the same as the final notice for program year 2015.

Today CMS announced, Covered California announced a modest proposed 4 percent statewide weighted average rate increase for plans offered in 2016 on their Health Insurance Marketplace, which is lower than last year’s increase of 4.2 percent. This is the second year in a row that Covered California has achieved single-digit rate increases. As of earlier this year, Covered California accounted for more than one out of every eight Marketplace enrollees who paid for coverage nationwide.

“We are encouraged by Covered California’s proposed rates for the 2016 plan year and pleased that consumers in California will continue to have access to quality, affordable health coverage,” said Kevin Counihan, CEO of the Health Insurance Marketplaces. “Today’s announcement demonstrates that the Affordable Care Act is working as intended to spur competition and transparency in the Marketplaces, keeping premium increases low and leading to affordable new choices for consumers. We are committed to working closely with other states as they review rate proposals and finalize rates for the 2016 plan year.”

Covered California credited an enrollment mix that includes many young and healthy enrollees, as well as premium stabilization programs created by the Affordable Care Act, for helping to hold the line on rate increases. These are two of the factors that CMS encouraged state insurance commissioners to consider when finalizing rates in a recent letter.

The Affordable Care Act’s rate review program helps to keep premiums affordable by requiring insurance companies to document and submit for review increases of 10 percent or more, as well as publicly justify unreasonable rate increases. This program is designed to provide consumers with greater transparency and input into the review process. 

Final rates for all states will be published no later than Nov. 1, 2015.

To view information about health insurance rates filings in a state, visit:

Related Industry