- California’s health benefit exchange, Covered California, announced today its plan options in 2024, including that premiums will increase on average 9.6%.
- However, even with rising premium rates, federal and state affordability assistance will ensure that Covered California will be more affordable than ever.
- The Biden Administration’s Inflation Reduction Act caps premium costs for all Covered California enrollees at 8.5% of income, and much lower for most.
- State subsidies to lower cost-sharing also means hundreds of thousands of enrollees will see their hospital deductibles eliminated–which were set to be as high as $5,400–along with lower co-pays for doctor visits, prescription drugs, and more.
- Higher overall rates show that policymakers need to continue cost-containment efforts.
SACRAMENTO, CA–Today Covered California, the state’s health care marketplace, announced its premium rates for 2024, which will increase by an average of 9.6%, notably larger than any in the previous five years. That said, the vast majority of the 1.7 million Californians enrolled in health plans through Covered California will be shielded from this premium increase, and in fact nearly half will see their out-of-pocket costs decrease, due to federal and state investments in affordability assistance.
The Inflation Reduction Act, championed by President Biden and passed by Congress in 2022, ensures that no one purchasing health coverage through a state marketplace will pay more than 8.5% of their income for a Silver plan, but many will pay less than that. In fact, according to Covered California, nearly 20% of Covered California enrollees will pay $0 for their premiums. A third of enrollees will see either no change at all or a decrease in their monthly premiums if they stay with their current plan.
In addition to reduced premiums, the recently enacted 2023-2024 California state budget provided a key investment to make accessing care more affordable. Championed by health care advocates and state lawmakers like Assemblymembers Pilar Schiavo, Jim Wood, and others, the new enhanced state-funded cost-sharing program will zero-out hospital deductibles in Silver plans for those under 250% of the poverty level—deductibles that would have been as much as $5,400 next year. The new program also lowers the cost of doctor visits, prescription drugs, maximum out of pocket costs and more for these nearly 650,000 Californians earning $34,000/year or less as an individual ($70,000/year for a family of four). Another 35,000 enrollees will be automatically enrolled into these higher-value plans to receive the new benefits.
“Consumers should be alarmed by rising health costs, but also be comforted that Covered California is offering direct and meaningful relief that should shield them from premium hikes, and may even reduce cost-sharing. With the combination of federal and state investments, Covered California is now more affordable than ever for most enrollees,” said Anthony Wright, executive director for Health Access California, the statewide health care consumer advocacy coalition. “Federal affordability assistance will cap premiums at a percentage of a families’ income and new state subsidies will eliminate deductibles and reduce cost-sharing, removing barriers to accessing care.”
Covered California consumers will also get more choice in their health plans, with Inland Empire Health Plan, Aetna CVS Health, and Health Net all extending their availability in many California counties. This means that many enrollees could reduce their costs even further by shopping and comparing plans.
“Californians who need coverage should take the time to shop and compare at Covered California which has new options and new affordability assistance that wasn’t available even a year or two ago. Comparison shopping can also significantly reduce your premium,” said Wright. “Consumers should take advantage of this additional affordability assistance, available up and down the income spectrum, which is more important than ever given the base premium increases.”
While most Covered California consumers are shielded directly from these rate increases, it highlights the need to further tackle the rising underlying cost of care, which is growing at rates well beyond inflation. Rising costs of care puts pressure on the health care system overall, even if consumers don’t feel it directly.
Health advocates have been working to address this through various reforms such as establishing the Office of Health Care Affordability to set cost targets and benchmarks industrywide, working on efforts to produce state-labeled generic drugs and negotiate lower drug costs, and increasing oversight on health care mergers that reduces choice and drives up cost.
“This rate announcement is a clarion call for policymakers to double down on efforts to contain health care costs. We need to bolster our cost containment efforts, from federal negotiations on prescription drug prices, to the setting a cost growth target for the whole industry through the new Office of Health Care Affordability, to new efforts to confront harmful health mergers and other cost drivers,” said Wright.
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Rachel Linn Gish, firstname.lastname@example.org, 916-532-2128 (M)