SAN FRANCISCO — The "relatively small" increase in premium rates for health insurance plans sold on California's insurance exchange is positive for non-profit hospitals, but the impact on insurers is uncertain, according to a recent report from Fitch Ratings.
California officials announced state-run insurance exchange plan premium rates will increase by an average of 4.2% next year, after negotiations with Anthem Blue Cross, Kaiser Permanent, and other insurers on the platform recently concluded.
This relatively small increase in premium rates for health insurance plans sold on California's insurance exchange could be positive for non-profit hospitals, according to Fitch analysts.
"However, the impact on insurers is uncertain as the rate increase is low in comparison to medical inflation and historical trends," they said in a report released Aug. 8. "We expect the meager increases to attract more people to the plans and they suggest that other state plans will also have small rate increases."
A higher percentage of insured would likely have a positive impact on non-profit hospitals in California, Fitch said.
For California's health insurers, the impact of the rate increase is less clear. If the rate increase attracts new and comparatively healthy consumers to the exchange, it could improve the risk characteristics of exchange-sourced business, analysts said.
Whether the rate increase is proportionate to the risk characteristics of those insured on the exchange is more uncertain.
"The increase in California's average rate may be indicative of rate increases in other states," Fitch said. "However, some variance in rate changes is inevitable as the plans are new, their initial rates varied widely and the needs of those insured vary."
Florida's largest insurer recently announced it will raise its exchange plan premium rates, on average, by 17.6%. However, of the 11 plans returning to that state's exchange, eight filed average rate increases and three filed rate declines.
