Covered California announced today that the preliminary average rate change for the 2020 individual market will be 0.8% — lower than the actual average increase over the past five years (7.9%), and the lowest rate change since Covered California first began offering coverage in 2014.
Covered California notes that the rate change was driven lower due to two new state laws enacted by the Governor and Legislature, designed to improve affordability and encourage enrollment. These new laws, starting in 2020, will establish new state subsidies for qualified consumers and restore the individual mandate. An estimated 922,000 consumers will be eligible to receive financial help from the state, which will lower the cost of their coverage.
For the first time, this financial help will include many middle-income Californians who were previously ineligible for assistance because they exceeded federal income limits, as well as low-income Californians who will receive assistance in addition to federal tax credits they already receive. Covered California projects that an estimated 229,000 consumers will become newly insured as a result of the increased financial help and the restoration of the state individual mandate penalty.
Restoring the individual mandate was a key factor in driving premiums lower, reducing premiums by between 2% and 5% per carrier, with an average of 3.2%. The individual mandate penalty will be administered by the California Franchise Tax Board; consumers who choose to go without coverage they can afford in 2020 will be subject to paying the penalty as part of their annual state tax filing.
All 11 of Covered California’s health plans will return for 2020. Anthem Blue Cross will re-enter several parts of the state (Central Coast, parts of Central Valley, Los Angeles County, Inland Empire) and become available for 59% of California consumers. As a result, 87% of Californians will be able to choose from three or more carriers and 99.6% of consumers will have two or more choices.