Obamacare open enrollment on Covered California starts today

Covered California’s fourth open-enrollment season has arrived with a measure of sticker shock for the health insurance exchange’s 1.3 million enrollees.

For the first time next year, many Obamacare premiums are increasing by double-digit percentages, and Tuesday begins a three-month period when consumers can change their coverage for 2017. Dec. 15 is the last day to make changes for those who want their 2017 coverage to begin New Year’s Day, but changes with later start dates can still be made through Jan. 31.

Jan Spencley, executive director of San Diegans for Healthcare Coverage, a nonprofit organization that offers free enrollment counseling, said her phone has already been ringing as many of the region’s estimated 123,910 Covered California beneficiaries open notices from their current insurance carriers that show how much their premiums will climb next year.

“We’re already reaching out to people in hopes that they’ll actively renew, or get the conversation started, so they don’t have a surprise in December,” Spencley said.

A comprehensive directory of certified enrollment counselors and insurance brokers is available online. Also, Covered California’s website includes a free tool for finding local brokers, counselors, storefront enrollment locations, related events and affiliated websites.

California expects premiums to rise an average of 13.2% for next year. In states where the federal government directly offers policies through Obamacare exchanges, the average increase will be 22%, according to the U.S. Department of Health and Human Services.

The price hikes are largest in states with fewer carriers offering health-exchange plans. Insurers have pulled out of some markets, citing coverage expenses that have been higher than anticipated — partly because Covered California and the rest of Obamacare have not been able to enroll enough younger, and thus generally healthier, people.

That said, California has been able to consistently deliver lower rates than other states because of its sheer size and because of policy decisions made before the Affordable Care Act mandated coverage for most Americans in 2014, said Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation, a nonprofit and nonpartisan think tank.

“In California, you have a number of significant insurers who have been in the individual market for a while. You have enough of a market, in terms of size, that there are carriers who want to serve all of it. Some states with a lot of rural areas, that’s not true,” Claxton said.

He said California’s controversial decision not to grandfather existing health plans in 2014, as many other states did, meant initial rates in 2014 were higher than in other states, front-loading the pain that others are starting to feel as grandfathered plans end.

Covered California’s strategy of serving as an “active purchaser” may also provide an advantage. Unlike other states that let any carrier participate, California’s exchange first reviews insurers’ rates and rejects those it believes are out of line.

In general, 2017 is seen as a pivotal year for Obamacare. It is the first year the whole system must stand on its own after the elimination of key risk-sharing programs that provided a backstop against losses for participating insurance companies.

Rate increases are softened significantly for enrollees who are eligible for income-based subsidies. As premiums increase, so do subsidies.

But there is an important caveat, Spencley noted. The size of the subsidy each person receives is a function not just of income but also of cost. Subsidies are calculated based on the premium of the second-cheapest silver-level plan in each local market. So if the second-cheapest silver plan’s premium rises 4%, subsidies will too. People in plans with greater premium increases will end up paying the difference, unless they switch to a less expensive policy.

While this might not seem like much of a difference, Spencley said it can quickly make a plan affordable for those already struggling financially.

“Some of the calls I get from people are just heartbreaking, because they’re one flat tire or dead car battery away from not being able to pay for health insurance anymore,” she said.

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