Covered California will raise rates 9.6% in 2024. Here’s why your premium might not change

Health insurance rates will climb an average of nearly 11% in the Sacramento region and 9.6% statewide next year for consumers who buy their coverage on the state-based Covered California marketplace, the agency announced Tuesday.

Federal and state financial relief, however, will shield the vast majority of the 1.7 million people who get their health insurance through Covered California from feeling the effect of those rate increases, said the consumer advocacy group Health Access California.

“Consumers should be alarmed by rising health costs, but also be comforted that Covered California is offering direct and meaningful relief that should shield them from premium hikes, and may even reduce cost-sharing,” said Anthony Wright, executive director for Health Access California, the statewide health care consumer advocacy coalition. ”With the combination of federal and state investments, Covered California is now more affordable than ever for most enrollees.”

Jessica Altman, executive director of Covered California, said that many enrollees will not see any change in what they pay each month for coverage in 2024. That’s because a lot of Californians are on silver-level plans, and the federal Inflation Reduction Act ensures no one purchasing one of these plans will pay more than 8.5% of their income for it.

“Nearly 90% of Covered California’s enrollees receive financial help, with many paying $10 or less per month for their health insurance,” Altman said. “With the enhanced subsidies and increased affordability support available to consumers, access to high-quality, affordable health care has never been more within reach for Californians.”

About 20% of enrollees will pay nothing for premiums in 2024, Altman said, and that statistic is unchanged from this year. More than a third of enrollees would see no change or a decrease in their monthly premiums if they remain with the same carrier in the same region.

Although rates will rise an average of 10.6% for residents of El Dorado, Placer, Sacramento and Yolo counties, Covered California said that consumers could save an average of 2.1% if they shop around and switch to the lowest-cost plan in their current metal tier.

Metal tiers range from bronze, with some of the lowest premiums, to silver, gold and platinum. By paying more in premiums, consumers can eliminate their deductibles at the highest metal tiers.

But Covered California also announced last week that Californians whose incomes are no more than 250% of the federal poverty level — $33,975 for an individual and $69,375 for families of four — are eligible for three silver plans that will require no deductible in 2024.

That means they won’t have to pay any medical bill other than their co-pays, and the size of many co-pays has been lowered. Eliminating medical deductibles removes a barrier that is often cited when consumers are polled about what prevents them from seeking medical care.

These changes are possible, Altman said, because Gov. Gavin Newsom and California legislators reached a budget deal that sent $82.5 million to Covered California to use to reduce costs for consumers. That $82.5 million came from funds raised through the individual mandate, a penalty taxpayers pay if they do not maintain health insurance.

What’s driving health insurance costs to soar?

The 2024 rate increase was the largest in five years. Rates rose by no more than 2% from 2020 through 2022, then jumped 5.6% this year.

Altman said a variety of factors are driving up the cost of health insurance. Since the COVID-19 pandemic’s stay-home orders ended, she said, health care organizations have seen a surge in people seeking their services.

Many people avoided going to medical facilities at the height of COVID-19 transmission, surveys have shown, either because they wanted to ensure there were enough resources for patients who had the new coronavirus or because they feared getting the disease before treatments and vaccines were available.

Even as patient admissions and visits declined, the number of people who had insurance coverage began to soar because:

▪ the federal government again offered subsidies that lowered the cost of Covered California policies, allowing hundreds of thousands of state residents to get a policy at monthly premiums of $10 or less;

▪ the state of California instituted an individual mandate that assessed a penalty on anyone who didn’t buy health insurance;

▪ Congress passed a law prohibiting states from dropping anyone from Medicaid, or Medi-Cal as it’s known in California; and

▪ California expanded Medi-Cal coverage to hundreds of thousands of undocumented immigrants, and many of them will be able to sign up for coverage starting in 2024.

Despite this growth in covered patients, many health care systems didn’t report returning to their pre-pandemic number of visits and admissions until late last year or in early 2023. Now, there’s a growing onslaught of patients at a time when there’s a shortage of labor for many positions.

The soaring demand for care, staffing challenges and a short supply of some medical goods and medications have all combined to drive up costs, Altman said.