The Changes that are Expected in 2021 in California Health Insurance Marketplace

California Health Insurance

The state of California has an individual mandate as of 2020. The Governor of California recently established a statewide penalty for not having health insurance that was earlier eliminated by the federal government. This was done to encourage people to obtain health coverage and to boost revenue that can be utilized to support premium assistance for lower and middle-class families. The state has also permanently adopted an extended open enrollment period that starts from November 1 and runs through January 31.

The average proposed health insurance California premium rate increase is 0.6% for 2021, which is the lowest in Covered California history. It is the smallest increase in the last few years, which is due to an increase in the new signups with a decline in healthcare use because of the coronavirus pandemic. Now fewer people are using their health insurance, as hospitals delayed elective procedures and so people chose to stay away from doctor’s offices.

There is a record-low insurance premium rate change for the second consecutive year, and the state has proved to the nation that they can achieve great results if they build on and strengthen the Affordable Care Act. The state has taken some bold policies to provide additional state financial help, reinstate the penalty to encourage consumers to enroll in health care, and make significant marketing investments in Covered California. The considerably low rate change was the result of their efforts to build on the Affordable Care Act through initiatives like the state subsidies and the individual mandate enforcement provision that became effective in 2020.

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Besides, more than 1.5 million people are enrolled in individual plans through Covered California, as of early 2020 and around 47,000 people have enrolled in small group plans. California was the first to authorize a state-run exchange under the Affordable Care Act that was signed into legislation in 2010. California’s state exchange is called Covered California and is widely considered as the country’s most successful exchange. According to the Centers for Medicare and Medicaid Services data, California has the second-lowest State Average Plan Liability Risk Score in the country, due to which the state has been among the top five healthiest states from the last six years.

The state has proactively enacted legislation to ensure that the individual market remains stable. The state law has banned the sale of short-term health insurance plans as of 2019 and prevents partners and sole proprietors from buying association health plans coverage instead of individual market plans. California has a state-based premium subsidy for people earning up to 600% of the poverty level. Covered California is one of the state-run exchanges that use an active purchaser model that means they directly negotiate with health insurance carriers to ensure that health plan rates, networks, and benefits are extremely consumer-friendly whereas other state-run exchanges simply set minimum standards which carriers are required to meet those guidelines for selling health plans.

The individual health insurance market of California consists of approximately 2.3 million people and around 1.5 million people enrolled through Covered California. Around nine out of ten of those enrolled in the marketplace are receiving federal or state subsidies or both that considerably reduces the costs of the health insurance. The health insurance plans offered through Covered California have average premiums of about $587 a month for an individual, since around 90% of the enrollees buying coverage through Covered California receive state and federal subsidies of about $450per month, thus their premium is reduced to about $137 per month. The rest of the residents of the state can directly buy coverage from health insurance carriers in the individual market.

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Around 230,000 people have signed up for health coverage since March 20, and meanwhile, only fewer people are using their health insurance. Currently, hospitals are delaying elective procedures and some people are avoiding obtaining healthcare services. As per the president of the California Association of Health Plans, health insurance companies are offering a small increase because the new law is aiming to attract healthier people to buy health insurance. The laws aim to ensure Californians that health plans are committed to offering high-quality healthcare to the residents which they expect and deserve.

Covered California is the only exchange in the country where all the health plans available are standardized. It means that within a single metal level, all the health plans have the same benefit, with the only exception of HSA-qualified plans whose benefits are different from the other bronze and silver plans. Eleven health insurance companies will be offering health plans through Covered California for the 2021 coverage. Six of the insurers have proposed average rate increase from 0.5% to 4.6%, and five insurers have proposed average rate increase from 1% to 9%. With Anthem and Oscan expanding their coverage area, nearly all the residents of the state will be able to select from plans of two insurers in 2021.

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