Citing Recent State Affordability Initiatives, Covered California Announces 2020 Premium Increase to be Lowest in Program’s History

This week, Covered California announced rates for health plan coverage in 2020, indicating the individual market will see a preliminary rate change of 0.8 percent – the lowest increase in rates since Covered California’s launch in 2014. For context, the five-year actual average increase over previous six years was 7.9 percent. According to Covered California, the significantly lower rate change was driven by two new state affordability initiatives: the establishment of the state-level individual insurance coverage mandate and expanded state premium assistance subsidies.

Through actions included in the 2019-20 Budget Act, an estimated 922,000 consumers will be eligible to receive to receive the expanded state subsidies, and, together with the individual mandate, the number of Californians accessing health insurance is estimated to increase by 229,000 consumers. Covered California Executive Director Peter Lee indicated in a statement, “The bold moves by Governor Newsom and the Legislature will save Californians hundreds of millions of dollars in premiums and provide new financial assistance to middle-income Californians, which will help people get covered and stay covered. California is building on the success of the Affordable Care Act and bringing quality care and coverage within reach for more people.”

The individual mandate and expanded subsidies will result in premium decreases between two and five percent per carrier after health plans rolled back increases added to premiums in 2019 resulting from Congress’ removal of the Affordable Care Act’s (ACA) financial penalty for not maintaining coverage pursuant to the federal individual mandate. These reduced rates are estimated to save Californians an average of $14 per month or $167 per year on their health care premiums in 2020.

Further, Covered California detailed the benefits to the estimated 922,000 Californian consumers as a result of the expanded state subsidy program:

  • 235,000 middle-income Californians who previously did not qualify for financial assistance due to their income are expected to be eligible to receive an average of $172 per household per month which will help them save an average of 23 percent off their current premiums.
  • 663,000 Covered California enrollees who currently receive federal financial help are estimated to be eligible to receive an average of an additional $15 per household per month which will help them save an average of five percent off their current premiums.
  • 23,000 Covered California enrollees whose annual household income falls below 138 percent of the federal poverty level (FPL) will see their premiums or the benchmark plan lowered to $1 per member per month.

The proposed rates, negotiated with Covered California, announced this week will be filed with regulators and are subject to final review. Preliminary rates for California’s 19 rating regions will be released on July 17. A fact sheet on the expanded subsidy program and individual mandate, including income thresholds for subsidies, from Covered California is available here. The full Covered California statement is available here.