We have some good news for individuals purchasing health insurance on the Covered California marketplace. The preliminary average rate change will be just 0.6% for the upcoming 2021 plan year. That’s the lowest figure since the launch of the Affordable Care Act and follows the previous low of 0.8 percent set in 2020.

Factors leading to this positive development include:

• state reforms to build on and strengthen the Affordable Care Act
• increased enrollment resulting in one of the healthiest individual market consumer pools
• favorable projections on the overall impact of COVID-19 on health care costs
• repeal of the federal Health Insurer Tax; and
• reduction of the participation fee for qualified health plan issuers.

“California continues to show the nation what can be done when you build on and strengthen the Affordable Care Act,” said Peter V. Lee, Executive Director of Covered California. “California’s bold policies to provide additional state financial help, to reinstate the penalty to encourage consumers to enroll in health care, and to make significant marketing investments in Covered California are providing stability and lower costs in the face of national uncertainty.”

The most recent data from the Centers for Medicare and Medicaid Services found that California has the second lowest “State Average Plan Liability Risk Score” in the nation, marking the sixth straight year that California has been among the top five healthiest states.

California’s efforts to build on the Affordable Care Act through affordability initiatives include the state subsidies and individual mandate enforcement provision that went into effect in 2020. Other programs have included ongoing investments in marketing and outreach.

In addition, all 11 health insurance companies will return to the market for 2021. Moreover, two carriers will expand their coverage areas. That means virtually all Californians will now have a choice of two carriers, with 88% having three or more.

Consumers both on and off the exchange will benefit from Covered California’s competitive marketplace, which allows them to shop for the best value and save money if they switch plans. The average rate change for unsubsidized consumers who shop and switch to the lowest-cost plan in the same metal tier is -7.3 percent, which means many Californians may be able to get a lower gross premium than they have now if they shop and switch.

California’s individual market consists of approximately 2.3 million people, including 1.5 million enrolled through Covered California. Nearly 9 out of 10 (88%) of those enrolled through the marketplace are getting federal or state subsidies, or both, to lower their costs. The rest are buying coverage directly from carriers in the individual market.

The Covered California marketplace is one of the options KeenanDirect can help you consider in finding the best option for your specific situation and needs.