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Anthem leaves SoCal as health insurance rates set to rise 13 percent in 2018

Covered California announced 2018 health insurance rates.

Individual health insurance plans in California will cost on average 12.5 percent more in 2018, Covered California announced on Tuesday.

Los Angeles County can expect an average rate increase of 13.4 percent, the state insurance exchange said. In Orange County, it will be 10.2 percent, and 17.2 percent in the Inland Empire.

All 11 insurance carriers currently on Covered California will continue to do business in the state, but one is cutting back significantly. In response to ongoing "volatility" in the markets, Anthem Blue Cross of California said it will no longer do business on the individual market in Southern California. The company will continue to cover people through employer-sponsored plans, but will pull out of 16 of the 19 regions where it currently offers individual plans through the exchange, remaining only in Santa Clara and parts of northern California and the Central Valley.

Anthem’s pullback comes amid what Covered California Executive Director Peter Lee called "unprecedented uncertainty" regarding what the federal government might do to the Affordable Care Act. At least 3 percent of the overall average rate increase is directly related to the lack of direction from Washington, he said.

Insurers are most concerned about threats from the Trump administration to "let Obamacare fail" by stopping future cost-sharing reductions that help cover certain out-of-pocket costs for certain lower-income Americans.

Covered California is poised to add an additional surcharge to silver plans – the most popular policies – if that federal money disappears or if it remains unclear whether Washington will provide it. The state exchange said it will decide whether to enact those surcharges by the end of the month.

"What we’ve said in our policy and what our plans want is a clear and definitive policy guidance. A tweet would not be enough," said Lee.

If the surcharges are added, they will add an average of 12.4 percent—with a range between 8 to 27 percent more to silver plan premiums.

Insurers are well aware of the risks involved with this approach, said Charles Bacchi, CEO of the California Association of Health Plans.

"We’re really kind of holding hands and jumping off the ledge here together with Covered California and saying ‘We’re going to make this work," he said.

Covered California is encouraging people to shop around, because beyond the average premium increases, how much consumers will end up paying will vary significantly depending on where they live, and on which plans and providers they choose. For example, premiums in Los Angeles County will rise from as little as 6 percent to as much as 42 percent.

"Most Californians still do have a number of different choices when it comes to buying their own coverage in the individual marketplace. I think that is the ultimate testament about whether or not the market is working," said Bacchi.

This story has been updated.