Affordable Care Act

Association Between a Capitated, Low-cost, County-Based Public Health Insurance Option and Affordable Care Act Premium Growth in California

By Arjun Teotia, Daniel R. Arnold, Richard M. Scheffler | Published April 21, 2023 in JAMA Health Network | Link to Full Article

Is a low-cost, county-based public insurance option associated with slower premium growth on the California Affordable Care Act exchange?

On Covered California (CC), the state-run Affordable Care Act (ACA) exchange in California, gross annual premiums for members have increased by 41% since CC started in 2014 ($9612 in 2022 vs $6804 in 2014).1 Through CC, individuals and their families can purchase private health insurance plans. Exchange coverage is generally intended for those who do not have access to health insurance through their employer, Medicare, or Medicaid. Nearly 90% of CC enrollees receive subsidized coverage in the form of reduced (often 0) premiums and reduced cost sharing.1 California is one of the few states that uses an active purchaser model for its exchange, which allows it to standardize benefits and cost sharing, selectively contract with insurers, and negotiate premiums.2 Premiums and insurers vary across the 19 regions of CC. Los Angeles (LA) has some of the lowest premiums and premium growth rates on CC. It is also the only region with a public plan—LA Care—which competes with 6 private insurers on the exchange.

Our work extends this research and is the first known study to empirically evaluate how a county-based public option performs in the ACA Marketplace in California. Specifically, we statistically evaluated whether LA Care was associated with reduced premium growth in LA compared with premium growth in other regions of CC.