Double digit premium increases for California grandfathered plans

The “trend” as it’s known in health coverage refers to the underlying cost of providing medical services to policyholders or managed care plan members, an expense that is reflected in premium rates. That trend remains in the positive double digits for two of the Golden State’s biggest health plan issuers, Anthem Blue Cross and Blue Shield of California. Even for grandfathered plans in effect prior to the 2010 enactment of the Patient Protection and Affordable Care Act that may not include the full panoply of benefits and deductible limits required by the ACA. The Los Angeles Times reports Anthem Blue Cross will increase premiums for these plans effective April 1, 2014 by an average of 16 percent and as much as 25 percent for some plans. Blue Shield of California is upping premiums for grandfathered plans by an average of 10 percent, according to The Times.

If the trend is in the positive double digits even for grandfathered plans that are less generous than ACA-compliant plans, it could be even higher among richer ACA-compliant plans that must provide a broader scope of essential health benefits and more limited deductibles. That will put to the test the buy side market power of California’s health benefit exchange marketplace, Covered California, to exert downward pressure on premiums as it prepares this year to negotiate rates with health plan issuers looking to offer plans through the exchange in 2015. Covered California’s negotiating clout in those negotiations will turn on how many individuals it enrolls in 2014 plans during the initial open enrollment period that ends March 31, 2014. Rates negotiated by the exchange will also affect some plans sold outside the exchange marketplace. Health plan issuers participating in the exchange marketplace must market their exchange plans outside the exchange at the same premium rate.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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Frederick Pilot

1 Comment

  1. Patrick Pine

    There is some early evidence that there may have been a big jump in claims in 4th quarter 2013 due to fears of loss of coverage which has led to losses – in turn driving increases

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