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California health insurance  -  California individual health insurance  -  What to expect on the rate side

Navigating the California Individual Health Insurance rate increases

We wish we could say that we're entering a period of rate stability in the California health insurance market but unfortunately, it appears to be more rocky than ever and we only see this accelerating. Let's take a look at why this is the case and what you can do keep your costs down for medical insurance.

First, what is going on to drive these increases?

There are really two large causes going on here;

one which we've been dealing with for over a decade now and the other one which is relatively new. We'd like to spare you the litany of medical costs increases resulting from technology, medications, treatment advances, and just general utilization since you get those with every California health carrier rate increase but unfortunately it's all true.


We use more and more health care which is additionally more and more expensive per treatment. It's that simple. You can track the inflation of health care costs to many different metrics but obesity, Type 2 diabetes, and it's extreme result of dialysis is the most interesting. A study showing how health care inflation tracked employment in the dialysis industry was very enlightening.


Until the U.S. adopts a different stance on people being healthy first rather than treating the symptoms of poor health later, costs will continue to go up. Yes, we're getting better at treating the resulting issues but at a very high cost. The ability to clean the blood externally in lieu of a functioning kidney is a marvel in technology. It also runs $3-5K monthly for an indefinitely amount of time. Dialysis usage is partially a function of Type 2 diabetes (untreated) which is partially a function of obesity. Obesity rates continue to increase with some of the fastest growth occurring in children and even infants. We could just stop there without looking at MRI, PET scan usage of the medication and cancer front to address the first culprit in the continuing rate increases. The second cause is more or less our faults in not addressing the first.

The current foray into health reform both at the federal and State level (July 1 California rate increases resulting from State mandates) centers around increasing both the amount of coverage (richness of benefits) and the ubiquity of coverage (having everyone with insurance) while pretty much ignoring the first cause. It's akin to chasing good money after bad. If everyone has insurance and richer benefits than they're currently purchasing now, costs will spiral without addressing the core causes of medical service utilization and cost. Preventative benefits only alert you to a problem (which will then be treated with the above advances in medication and technology) but they don't mitigate the behavior that drives a large percentage of health issue. People know that smoking and eating junk food is bad for you. Instead, the new direction of health reform mandates richer coverage. You'll have better benefits but at a much higher rate since there's no free ride in the universe as we're finding in

California with the mandated maternity benefits effective 7/1/2012 for all plans. It sounds great but no one can afford what they have now much less with an additional 10-20% just due to that mandate. Keep in mind that the carriers are already mandated to use 85% of premium for medical care alone (no admin, marketing, margin, etc) so any rate increase is a result of either cause 1 or 2 above. We're fans of the 85% rule since it will hopefully move the dialog past the condemnation of the carriers (which are pass-through anyway) and back to the real cause (and hopefully solution) of the current medical inflation.

So, what can we do about it?
Stay vigilant.

Check the market with our free California health insurance quoting system to make sure you're on the best value since this will see-saw annually at least. We're happy to run a quote for you against your current coverage. Also, make sure you're on the best tier. Some people are rated up at the time of application due to health issues which may no longer be an issue. We love getting rid of these increases which can run 25%, 50%, or more.

The carriers aren't exactly going to advertise this ability (one more reason a 3rd party health insurance broker like us is invaluable) so let us help you take a look at your rate. There's a sizable percentage of existing policies that still have a higher tier...sometimes for years. Let's start there. Also, you may be on an older plan which is no longer competitive. In general, newer plans are designed to keep costs down with benefits changes and they can be much less expensive. Of course, the State and Federal government will likely eliminate this variability, but you can save until then.
Until there is an individual financial incentive for people to take care of themselves (say health insurance subsidy for smoking cessation or 10% reduction in BMI), the rates are only going to go higher.

Unfortunately, the current view of both California individuals and Government health officials will only accelerate this so we need to keep an eye on the marketplace to find the best option available right now.

You can run your Covered California Plan Quote here to view rates and plans side by side from the major carriers...Free.

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