Covered health insurance premiums in California will rise 6% in 2023

Doctor with patient
A doctor listens to a man’s heart beating at a clinic in Bieber, California. Photo by Anne Wernikoff for CalMatters

Premiums for health insurance plans sold through the state’s marketplace will increase an average of 6 percent next year, Covered California officials announced.

This rate increase is the largest in California since 2019. Over the past three years, insurers have kept average increases under 2%.

Rate changes varied by region, from an 11.7 percent increase in Imperial, Inyo and Mono counties to no change in Fresno, Kings and Madera counties.

When premiums go up, a person’s financial aid usually goes up as well. The benefit is based on household income, so subsidies can offset some of the increase. But people who don’t qualify for subsidies will bear the full cost of the rate hike.

“Premiums are a capture of what health care costs are, how they vary across geographies and communities, how health care costs rise over time, which we know are already too high in this country and rising,” said Jessica Altman, executive director of Covered California.

She noted that California’s rate hikes are still lower than in other states. A recent Kaiser Family Foundation analysis found a 10 percent average premium increase offered by 72 insurers in 13 other states.

The increase in the rate, Altman said, is largely due to people resuming doctor visits and procedures they put off during the peaks of the COVID-19 pandemic. There is also the cost of general inflation.

About one percent of the increase, however, is due to the potential loss of increased subsidies from the federal government that expire at the end of this year. Without the extra help, people will pay more for their premiums, likely causing young, healthy people to drop their coverage. And when healthy people leave the market, premiums go up for everyone.

The federal government’s U.S. bailout last year provided California with about $3 billion earmarked for two years of additional financial assistance through Covered California. The new law helped further reduce what people pay for their monthly premiums, prompting more people to sign up for health insurance. It also expanded who is eligible for savings to include middle-income earners.

Currently, 1.7 million Californians buy their coverage through the state marketplace. Covered California has estimated that if Congress doesn’t renew subsidies for America’s Rescue Plan, about 1 million people will see their premiums double and about 220,000 likely drop their coverage.

“(The rate increase) for the subsidized population is almost decoupled from what they pay out of pocket. What’s more important is what happens to the (US bailout) subsidies,” said Christine Eibner, senior economist at the RAND Corporation, a think tank.

Altman said the sooner Congress acts, the better chance it has of avoiding consumer confusion in the fall. Covered California typically sends out renewal notices to enrollees in early October, before the enrollment period, and clarity for people by then is key.

“There were references both ways – ‘Is it going to be permanent?’ Will it be temporary? Will it stay as it is?…Or will there be some adjustments?’ — and we really don’t know,” Altman said of the talks taking place in Washington, D.C

California’s 2022-23 budget includes $304 million for middle-class enrollees who would start if Congress doesn’t renew aid. While helpful, it won’t fill the hole that the $1.7 billion in annual federal aid will leave, Altman said.

Covered California also announced that another insurer, Aetna CVS Health, will join the state’s marketplace and be an option for people in El Dorado, Fresno, Kings, Madera, Placer, Sacramento and Yolo counties. Meanwhile, Anthem Blue Cross will expand in San Diego County.

CalMatters is a public interest journalism venture committed to explaining how the California State Capitol works and why it matters.

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