Source: Los Angeles Times
Premiums in California’s health insurance exchange will rise by an average of 8.7% next year, marking a return to more modest increases despite ongoing threats to the Affordable Care Act.
The state marketplace, Covered California, said the rate increase for 2019 would have been closer to 5% if the federal penalty for going without health coverage had not been repealed in last year’s Republican tax bill.
The average increase in California is smaller than the double-digit hikes expected around the nation, due largely to a healthier mix of enrollees and more competition in its marketplace. Still, health insurance prices keep growing faster than wages and general inflation as a result of rising medical costs overall, squeezing many middle-class families who are struggling to pay their household bills.
The 8.7% increase in California — 9% in most parts of Southern California — ends two consecutive years of double-digit rate increases for the state marketplace. In 2018, premiums rose an average of 12.5% statewide.
Open enrollment on the exchange starts Oct. 15, for coverage starting Jan. 1.
“It’s not great that healthcare costs are still increasing that much, but the individual market is not sticking out like a sore thumb like it has in other years,” said Kathy Hempstead, senior advisor at the Robert Wood Johnson Foundation. “It’s falling back to earth.”
The rate increase will be cushioned somewhat for the nearly 90% of Covered California’s 1.4 million enrollees who qualify for federal subsidies to help them afford coverage. Those subsidies rise along with premiums. For instance, Covered California said subsidized enrollees would pay 6% more, on average, in 2019 if they don’t change plans.
The future may be less bright. An estimated 262,000 Californians, or about 10% of individual policyholders in and outside the exchange, are expected to drop their coverage next year because the ACA fines were eliminated, according to the state.
Peter Lee, executive director of Covered California, warned that the exodus of healthier consumers will drive up insurance costs beyond 2019 — not just for individual policyholders but for California employers and their workers.
“We are paying, in essence, a surcharge for federal policies that are making coverage more expensive than it should be,” Lee said in an interview. “There will be more of the uninsured and more uncompensated costs passed along to all of us.”
Critics of the Affordable Care Act say it has failed to contain medical costs and left consumers and taxpayers with heavy tabs.
Foiled in its attempt to repeal Obamacare outright, the Trump administration has taken to rolling back key parts of the law and has slashed federal marketing dollars intended to boost enrollment. Instead, the administration backs cheaper alternatives, such as short-term coverage or association health plans, which don’t comply fully with healthcare law’s rules and tend to offer skimpier benefits with fewer consumer protections.
Taken together, those moves are likely to draw healthier, less expensive customers out of Affordable Care Act exchanges and leave sicker ones behind.
Nationally, 2019 premiums for silver plans — the second-cheapest and most popular plans offered — are expected to jump by 15%, on average, according to an analysis of 10 states and the District of Columbia by the Avalere consulting firm. Prices vary widely across the country, however. Decreases are expected in Minnesota, but insurers in Maryland are seeking 30% increases.
In California, exchange officials emphasized, consumers who shop around could pay the same rate as this year, or even a little less.
Christy McConville of Arcadia already spends about $2,000 a month on a Blue Shield plan for her family of four, opting for “platinum” coverage, the most expensive type. Her family doesn’t qualify for federal subsidies in Covered California.
She’s worried about further increases and doesn’t want to switch plans and risk losing access to the doctors she trusts. “We’re getting right up to the limit,” McConville said.
Amanda Malachesky, a nutrition coach in the Northern California town of Petrolia, said the elimination of the penalty for being uninsured makes dropping coverage more palatable. Her family of four pays almost $400 a month for a highly subsidized Anthem Blue Cross plan that has a $5,000 deductible.
“I’ve wanted to opt out of the insurance model forever just because they provide so little value for the exorbitant amount of money that we pay,” said Malachesky, who recently paid several hundred dollars out-of-pocket for a mammogram. “I’m probably going to disenroll … and not give any more money to these big bad insurance companies.”
Covered California is aiming to stem any enrollment losses by spending more than $100 million on advertising and outreach in the coming year. In contrast, the Trump administration spent only $10 million last year for advertising the federal exchange across the 34 states that use it.
Also, California lawmakers are looking at ways to fortify the Affordable Care Act. State legislators are considering bills that would limit the sale of short-term insurance and prevent people from joining association health plans that don’t have robust consumer protections.
Despite the constant uncertainty surrounding the health law, many insurers nationally are posting profits from their Obamacare business and some plans are looking to expand further on the exchanges.
In California, the same 11 insurers are returning, led by Kaiser Permanente and Blue Shield of California. Together, those two insurers control two-thirds of exchange enrollment. In 2018, Anthem pulled out of several areas across the state. (Kaiser Health News is not affiliated with Kaiser Permanente.)
The Covered California rate increases are fairly uniform across the state. Monterey, San Benito and Santa Cruz counties faced the highest increase at 16%, on average.
The rates are subject to state regulatory review.
The healthcare law’s expansion of coverage has dramatically cut the number of uninsured Californians. The proportion of Californians lacking health insurance fell to 6.8% at the end of last year, down from 17% in 2013, federal data show.
A handful of the world’s biggest drugmakers are canceling or reducing planned price increases in the U.S., following a new California drug pricing transparency law and continued political pressure over pharmaceutical costs.
The California law, which began to take effect earlier this year, requires drugmakers to give insurers, governments and drug purchasers advance notice of large price increases, as a way of publicly pressuring pharmaceutical companies to keep prices down. In the past three weeks, Novartis AG, Gilead Sciences Inc., Roche Holding AG and Novo Nordisk A/Ssent notices to California health plans rescinding or reducing previously announced price hikes on at least 10 drugs.
The drugs include everything from multibillion-dollar blockbusters like Novartis’s psoriasis drug Cosentyx to smaller products, such as Entresto for heart failure and Gilead’s drugs Letairis for pulmonary hypertension and Ranexa for angina. The changes were described by a health plan official who spoke on condition of anonymity because the information isn’t yet public. Drugmakers confirmed most of the pricing decisions.
“Many factors influence our decisions to change product prices for our U.S. portfolio and it is not uncommon for us to adjust plans for price changes,” Novartis spokesman Eric Althoff said in an email. Novartis said it notified some health plans of potential price increases but later decided against implementing them.
Transparency LawThe California measure, signed in October by Governor Jerry Brown, is among the most aggressive efforts by states to peel back the secretive process of setting drug prices. The law requires pharmaceutical companies to notify insurers and government health plans at least 60 days before planned price increases of more than 16 percent during a two-year period.
It also provides a rare window into the complex U.S. pharmaceutical market, where drugmakers sometimes raise list prices multiple times a year, then negotiate discounts and rebates with insurers and drug plans.
The law is being challenged in court by the drug industry’s lobbying group Pharmaceutical Research and Manufacturers of America. Many drugmakers have been complying in the interim, sending out notices to health plans.
The law’s implementation comes as President Donald Trump, who has accused drugmakers of “getting away with murder,”promised on May 30th that drug companies will voluntarily reduce the price of drugs.
Real Moves?What seems like transparency or falling prices forced by the new law may not actually be so, said Richard Evans, an health and pharmaceutical analyst at SSR in Montclair, New Jersey.
Pharmaceutical companies are likely “throwing up a smokescreen” to conceal the timing and magnitude of their actual price increases from competitors, or from purchasers who might then stock up in advance of an increase, said Evans. He predicted that the law won’t slow the actual rate of actual price increases.
“If what you are trying to do is limit price inflation, this is not the way to go about it,” said Evans, whose company provides drug investment research. “This is not going to change mainstream list price behavior at all.”
Other drugmakers have raised prices around the same time. Earlier this month, the Financial Times reported that Pfizer had raised prices on about 100 drugs, following a pattern of regular increases that the company takes each year.
Swiss drugmaker Roche confirmed that it was canceling a proposed 4 percent price increase for Cathflo Activase, a clot treatment.
Roche has gone ahead with price increases on some of its top-selling cancer drugs. In July it raised the price of a single-use vial of Herceptin, a breast cancer drug, by 3 percent to $1,558.42. Avastin, another cancer drug, went up 2.5 percent to $3,187.76 for a 16-milliliter vial, according to price data compiled by Bloomberg Intelligence and First Databank. The changes follow increases for both drugs in January.
The price hikes were small enough that Roche wasn’t required to send a notification, a spokeswoman for the company said.
Novo Nordisk told California drug purchasers it was also reducing a previously announced price increase, said company spokesman Ken Inchausti. Inchausti declined to name the drug or drugs, and wouldn’t provide details on the price changes.
In early July, Novo Nordisk raised the price of its Victoza diabetes injection by 7.9 percent, and its diabetes drugs Levemir and Novolog by 5 percent, according to data compiled by First Databank and Bloomberg Intelligence. The new price is $293.75 for a 10 milliliter vial of Levemir and $289.36 for a 10 milliliter vial of Novolog. Patients can use more than one vial per month.
According to the health plan official, Gilead canceled planned price increases for four drugs, none among its biggest blockbusters. The company had given notice in May that it would be increasing prices roughly 7 percent on July 1.
Gilead didn’t respond to multiple requests for comment.
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