Healthcare Sticker Shock in Sunny California

If you live in California, you enjoy warm weather, the Pacific Coast surf and sunshine. Disney World. The Golden Gate Bridge. You’ll also get some of the highest insurance premiums come January, 2014 when Obamacare kicks in. 

California predicted that healthcare premiums would actually be lower with the Affordable Care Act (ACA). But the former CEO of WellPoint, Angela Braly, testified before Congress that it’s California Plan, Anthem Blue Cross was going to raise premiums by 30%. According to a Forbes article, “Rate Shock: In California, Obamacare To Increase Individual HealthCare Premiums by 65-146%,” Peter Lee, the Executive Director of the California exchange predicted that health care premiums wouldn’t come close to the doom-and-gloom predictions. But, the reality is, doom and gloom is on the horizon. In California, the prediction is that non-group insurance premiums could increase 146 percent.

While Lee predicted that rates would actually be lower, according to the article he was wrong in his plan comparisons. The reality is Obamacare will double the cost of premiums in most markets. California Health exchanges have several levels of plans, but participants are restricted if they smoke or are over 30. Lifestyle habits or age can prevent participation in lower-cost plans. If you’re over 40, for example, the cost of coverage will go from pre-ACA coverage at $121 to Obamacare for the same coverage at $261, an increase of 116%. Even 20-year olds, who paid only $92 for coverage pre-ACA, will have a 100 percent increase for the same coverage and 123 percent for catastrophic coverage.

The Bay Area, Orange County and San Diego will see the highest premium costs. Large insurers like Anthem Blue Cross and Kaiser Permanente are participating in the exchanges. Others, like Aetna and United Healthcare are opting out for now.

All this reality is a public relations nightmare. It’s worse for Californians who are struggling to make ends meet in a tough economy. Housing prices are among the highest in the areas hit the hardest by healthcare premium increases. California, who has prided itself in affordable healthcare and greater employee protections through tougher employment laws, is going to have a tough sell on healthcare. The reality is, according to the article, many people who were supposed to benefit from the plan may be shut out of the healthcare market altogether.

What is happening in California is a good indication of what’s in store for employers and individuals who will have to purchase healthcare, either from exchanges or sign up for employer-sponsored healthcare plans. Higher premiums mean less money to take home to pay the bills. With salaries lower in many areas of the country, bonuses and raises a thing of the past, it’s going to be harder to make ends meet for everyone. Faced with higher premiums, expect workers to campaign for higher wages. There is already a push to increase the minimum wage to $9.00 an hour. 

There will come a tipping point where employers won’t be able to bear the cost of supplementing health insurance premiums to keep them affordable and pay the higher wages to help employees pay their portion. California will have the surf and sun, but may also be known for health care rates that are over the moon.

Photo Source: MorgueFile