Covered California Puts Consumers in the Health Insurance Driver’s Seat!
Covered California, the new statewide marketplace for private health insurance, recently announced proposed rates it negotiated on behalf of Californians. The fact that rates are significantly lower than most had projected is great news for the implementation of the Affordable Care Act (ACA) and for low and middle income California families.
Nevertheless, political opponents are on the attack. Bafflingly they are using our current dysfunctional individual insurance marketplace as some kind gold standard for comparison. Essentially muddying the waters by comparing comprehensive coverage and rates in Covered California to plans currently offered in the individual marketplace, many of which are junk or close to it. It is like comparing the quality of a Lincoln to a Yugo.
Over 7 million uninsured Californians can attest to the effectiveness of our current individual insurance marketplace. A market leaving millions to fend for themselves if they get sick is hardly a beacon of hope for struggling Californians. In other words, it’s a wreck! This marketplace leads to coverage denials based on pre-existing conditions, as well as bankruptcies and foreclosures when a family member gets sick, is underinsured, denied a claim or lacks coverage.
Unfortunately, illness is unavoidable. Fortunately, getting ill and losing you’re life savings isn’t what’ll happen when Covered California opens its doors in January 2014.
Covered California pools purchasing power, negotiating rates for millions of Californians who currently lack the clout to effectively negotiate for themselves. A fairer comparison would be between Covered California’s rates and those offered by California’s small employer market. Keep in mind; this is still apples to eggs. While both markets don’t allow pre-existing condition exclusions, small employer coverage isn’t standardized, employee out-of-pocket costs aren’t capped, vary greatly, and are rising rapidly.
That being said, let’s assume the average small employer-sponsored plan is approximately equivalent to a silver plan offered by Covered California. The average premium in California’s most expensive market, San Francisco, is $403 in the small group market compared to $351 at Covered California—that’s a 13% lower average premium. In fact, Covered California’s rates average 29% lower than the small group market in Los Angeles.
Covered California’s rates include “essential health benefits”—a broad array of services including office visits, hospital stays, prescription drugs, mental services etc. Simply put, the rates cover pre-existing conditions, chronic conditions and acute care. Additionally, the ACA ensures low- and middle-income families pay no more than eight percent of their income on health insurance. At Covered California, paying premiums and crossing your fingers in hopes your insurer will cover your illness will soon be a relic of the past.
Covered California’s policies are standardized, making apples-to-apples comparisons possible, a feat that is unthinkable in today’s marketplace. Soon consumers will even be able to compare the quality rating between standardized private plans. In fact, being able to compare plans for cost and quality is a major driver for reform because the current marketplace is a shell game of hidden costs and arbitrary coverage denials that gives all the power to big insurers.
Covered California will empower California consumers with clear, concise, no nonsense information about their choices in the new marketplace. Most importantly, it will be easier for low and middle income California individuals and families to budget for health care. Californians will be certain they have reliable coverage when they need it, bringing more security to their lives.