Covered California Projects 1.8% Rate Hikes in 2022

The average rate change for the past three years is only 1.1%, which also marked the third year since the launch of California's state subsidy program.

Covered California projects that preliminary health insurance rates for 2022 will increase by an average of 1.8% statewide.

The state's health insurance marketplace credited the relatively low rate hike to expanded subsidies sent to the state under the American Rescue Plan, which lowered premiums by an average of 50% for hundreds of thousands of Californians--with some paying as low as one dollar in premiums per month.

Gov. Gavin Newsom said "California is continuing to make significant progress towards covering everyone in our state, and a key part of that is to make sure folks can take advantage of the federal support through the American Rescue Plan."

"The pandemic highlighted how important it can be to have access to quality, affordable healthcare coverage, and Covered California is making that happen for more people than ever before," Newsom said.

The preliminary average rate change of 1.8% will apply to California's individual market, which covers 2.3 million people – the highest enrollment in the marketplace's history -- including the 1.6 million enrolled through Covered California and "off-exchange" enrollees who sign up directly through a health insurance carrier.

From 2020 to 2022, Covered California payers said that the improved risk mix from new enrollment has contributed to lowering premiums by 3% to 5%. Other factors have caused premium trends to be below the usual medical cost trend of 5% to 7%, such as the impact of the COVID-19 pandemic and deferred care.

The average rate change for the past three years is only 1.1%, which also marked the third year since the launch of California's state subsidy program.

"Healthcare costs are never a one-year story," said Peter V. Lee, executive director of Covered California. "The past three years show how California has led the way not only by providing stability and lower costs to our consumers, but also through the state's modeling of expanded financial help, which is now reflected in the American Rescue Plan."

"By getting more people insured and lowering the costs of coverage, we are creating a virtuous cycle of more people being insured, healthier consumers and lower rates for everyone," Lee said.

The rate hike reflects changes in premiums before federal subsidies, which cover about 89% of the premium for those getting financial help. In addition, premiums will vary by region and by an individual’s personal situation.

The rate change for unsubsidized enrollees who switch to the lowest-cost plan in the same metal tier is -7.9%, which will allow many enrollees to shop for a lower gross premium.

California Association of Health Plans President/CEO Charles Bacchi said the low rate hike "makes it abundantly clear that the Affordable Care Act is thriving in California."

"With the expanded coverage options providing most enrollees with four to five health plan choices, there is ample opportunity for consumers to shop around for even lower premiums, he said. "With record enrollment in California's individual marketplace along with new state polices extending Medi-Cal to more undocumented Californians, we are well on our way to closing the uninsured gap in California."

The special enrollment period runs from November through the end of 2021.