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California health exchange to see double-digit rate hike in 2017

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Health insurance plan rates will rise an average of 13.2% next year in California’s health insurance exchange, more than triple the increases of prior years, state officials announced.

That 13.2% hike in the exchange, known as Covered California, compares with a 4% increase this year and a 4.2% increase in 2015, the state said Tuesday in a news release.

Covered California executives attributed the big rate hike to several factors including rising health care costs, especially for specialty drugs, and pent-up demand for services by enrollees who were uninsured prior to the enactment of the 2010 health care reform law.

Enrollees who switch plans, however, may see much lower premium increases, exchange executives say.

“Shopping is going to be more important this year than ever before,” Covered California’s Sacramento-based executive director, Peter V. Lee, said in the statement.

“Almost 80% of our consumers will either be able to pay less than they are paying now, or see their rates go up by no more than 5%, if they shop and buy the lowest-cost plan at their same benefit level. That’s the power of shopping,” he said.

For many of those insured through Covered California, a big chunk of the premium increase will be absorbed by the subsidy paid by the federal government to help lower-income enrollees buy health insurance. About 90% of Covered California enrollees are eligible for the premium subsidies — authorized by the Patient Protection and Affordable Care Act — to help to pay for their premiums. The average subsidy covers roughly 77% of enrollees’ monthly premium.

With 1.41 million enrollees, California has the largest state-run health insurance exchange and the second largest ACA public exchange, trailing only Florida, whose exchange, run by the federal Department of Health and Human Services, has 1.53 million enrollees.