Individuals who purchase their own private health insurance in California next year will see their rates increase by less than 1%, this is the lowest increase in five years. This is due to the state trying to implement a law that taxes those who do not buy healthcare coverage. Even though the Federal Government did away with the tax penalty in 2019; it appears that the state of California will try to impose the penalty through state law.

The average increase will be 0.8% next year, according to Peter Lee, executive director of Covered California. The rate increases companies will charge will still need approval by state regulators.

Many people in California, population near 40 million people, secure their health insurance by electing employer plans available to them. Employer coverage for the most part is the best option for most. This is primarily due to the fact, that employer plans offer the most comprehensive benefit packages which also cover preexisting conditions and monetary contributions are made on behalf of the employee to help reduce the cost. The only other option available now for people to secure this type of coverage is through the affordable care act known as Obamacare.

Unfortunately, roughly the 2.2 million people who have purchased insurance through the individual marketplace plans have had to suffer through rate increases averaging 8% every year since 2014, when Obama’s healthcare reform went into effect. Rate increases have not been the only obstacle individuals have been faced with. Their deductibles and max out of pockets have skyrocketed as well, leaving the overall tax credit received to be a moot point. They also have less companies to choose from due to a lot of major insurers leaving the marketplace and their network of doctors have become limited because more and more providers are not excepting the plans.

In 2020 state officials say the potential tax penalty will keep the rates in check by the state of California taxing residents who refuse to purchase insurance. They intend to use the funds received from the tax penalty to help middle-income people pay their monthly insurance premiums. State officials believe the penalty will allow an additional 229,000 people to secure health insurance coverage next year. “More people having insurance lowers the risk for insurers, who can then lower rates”, Lee said. Although this may be the case for the insurer, what about the consumer? Will they mandate all insurance companies participate and enforce doctors to be in network with the plans offered because the consumer is paying a penalty tax or purchasing a plan that may not necessarily meet their needs?

The Affordable Care Act required most to purchase insurance or pay a penalty. The U.S. Supreme Court upheld that law, ruling the penalty was a tax; however, in 2017 Republicans in Congress eliminated the tax beginning with the 2019 tax year. Thus far, the tax has not always lowered premiums. In 2018, when the federal tax was still in place, rates jumped 12.5% in California. “It didn’t change anything. They were paying it. They’ve been paying it for years,” Newsom said Tuesday about taxing people who don’t buy health insurance. “We can see premiums continue to skyrocket for everybody or we can stabilize the market.”

Anthem Blue Cross, which only sells plans in Northern California, Santa Clara County and the Central Valley, announced Tuesday it would begin selling plans next year in Los Angeles County and elsewhere. The expansion means 99.6% of Californians will have at least two companies to choose from, while 87 percent will have three choices. This is another factor to helping keep costs low is more choices for consumers. Anthem “Health plans know that consumers that have a choice choose the best value for them,” Lee said. “That’s a key element in this premium increase being so small.” If this is the case, I ask again, what is being done to enforce insurers to participate? Why does it always come back to the consumer paying a penalty tax first? Give the consumer competitive affordable healthcare that meets their needs and the majority will not go uninsured. Most people will always protect their investments because they have worked hard to obtain what they have earned.