SACRAMENTO — Covered California, the state’s health insurance exchange, on Monday boasted a second straight year of modest rate hikes next year for the majority of its customers, but one region of the state won’t have it so easy: the Bay Area.
While average premiums will rise only 4 percent statewide, rates will climb as high as 12.8 percent in Santa Cruz County, 7 percent in Santa Clara County and more than 6 percent in Alameda and San Mateo counties, exchange officials revealed.
Meanwhile, premiums will move more modestly in some parts of the state, such as Southern California, where rates will dip 0.2 percent in northeast Los Angeles County and inch up in southwest L.A. by only 2.5 percent. The reason, many say, is simple: There is more competition among hospitals and doctors’ groups in Southern California than in Northern California.
“Health care is local,” Peter Lee, executive director of Covered California, said during a news conference to announce the rates, “and provider competition based on where you live is the key driver of underlying costs.”
Covered California’s rates only affect people who buy their own health insurance, and have no bearing on small-group or large-employer plans.
In the Bay Area, only hospital-rich San Francisco will see an average rate of increase — 3.4 percent — lower than the state average. But even for the rest of the region, the news could be worse: Some states are seeing double-digit increases in their rates under the health insurance plans also known as Obamacare. And the average California rate hike for the plans created by the Affordable Care Act is slightly lower for 2016 than this year’s average increase of 4.2 percent.
What’s more, Lee said consumers can reduce their premiums by an average of 4.5 percent — and more than 10 percent in some regions — if they shop around and change to a comparable, lower-cost plan.
Lee said the modest statewide rate increase is “further evidence that the Affordable Care Act is working” and that Monday’s announcement should convince critics that Covered California was able to “turn the tide on Chicken Littles who said the sky would fall once again.”
Critics pointed out how Covered California’s 1.3 million enrollees fell far short of its projection last fall for 1.7 million customers, potentially leaving the exchange vulnerable to higher rates.
A recent Kaiser Family Foundation survey showed that 44 percent of Covered California policyholders already have difficulty paying health insurance premiums.
Lee, however, said the exchange’s mix of young, ethnically diverse enrollees — “among the healthiest” group in the country — helped keep costs down.
But he acknowledged that Northern California would be harder hit in 2016. So did others.
“Particularly in the Bay Area and Sacramento there is a lack of choice among providers, putting the health plans in a difficult place in terms of getting a good price,” said Beth Capell, a policy advocate for Health Access, a statewide coalition for California health care consumers.
But groups representing hospitals and doctors around the state refuted that notion, calling it misleading.
Jan Emerson-Shea, a spokeswoman for the California Hospital Association, said competition is only one of many factors that determine the cost of delivering health care in different regions of the Golden State.
She said hospitals in Northern California are far more unionized than those in Southern California, resulting in higher wages and benefits. The Bay Area’s higher cost of living also drives up the costs here.
Also, Shea said, “the impact of California’s unfunded hospital seismic mandate is more costly in Northern California, which has fewer — but larger — hospitals than in Southern California.”
Molly Weedn, spokeswoman for the California Medical Association, said doctors, like other small-business owners in the Bay Area, are struggling with “the rising costs of rent, utilities and paying staff to live and work in the area.”
San Francisco-based Blue Shield of California disagreed, blaming the higher rates in the Bay Area on higher-cost providers and less competition compared with Southern California.
Lee also announced Monday that two new health insurance carriers will be added to the current exchange, for a total of 12 plans in 2016: UnitedHealthcare Benefits Plan of California will offer coverage in Santa Cruz, Monterey and San Benito counties, the Central Coast counties, Northern California, the Central Valley and a few Eastern California counties.
Oscar Health Plan of California will offer plans to part of Los Angeles County and Orange County.
Enrollment for 2016 will begin Nov. 1 and last through Jan. 31.
Contact Tracy Seipel at tseipel@mercurynews.com or 408 920-5343 and follow her at Twitter.com/taseipel.
