(Reuters) - Healthcare premiums will rise an average of 4.2 percent in 2015 on California's health insurance exchange, the largest of the state marketplaces established by President Barack Obama's healthcare reform, state officials said on Thursday.
Ten companies will sell plans for 2015 through Covered California, three fewer than this year, said the exchange's Executive Director Peter Lee.
Opponents of Obama's healthcare reform, the 2010 Affordable Care Act, have warned for months that 2015 premiums would soar due to the high medical costs of the first wave of enrollees who, they claimed, are older and sicker than the general population.
In California, however, insurers' projections of 2014 medical spending were fairly accurate. One of the largest insurers, WellPoint Inc, said this week that because its 2014 premiums matched medical costs it had generally proposed smaller increases than competitors.
Other companies planning to sell 2015 Obamacare policies in California include Kaiser Permanente, Health Net, and Molina Healthcare.
California is the largest of about a dozen states to announce proposed 2015 rates. Each state's insurance department or other agency must approved premiums.
Most increases are in the mid-single digits, Andy Slavitt, principal deputy commissioner of lead Obamacare agency the Centers for Medicare and Medicaid Services, told Congress on Thursday.
An analysis by the non-profit research and advocacy group FamiliesUSA found that proposed 2015 premiums varied widely from state to state and even within states. One Colorado plan has a 22 percent decrease while another has a 17.5 percent increase, for instance. In Indiana proposed rates vary from a 3 percent drop to a 35 percent rise.
Overall, proposed premiums fell for at least one plan in nine of the 12 states, FamiliesUSA said.
If the California premiums are approved, 16 percent of customers would see the same or lower premiums for their current plan, one-third would see an increase of up to 5 percent, one-third would pay 5 to 8 percent more, and 13 percent would pay 8 percent more. Consumers should shop around rather than automatically renew, said Lee of Covered California.
One way insurers have kept a rein on spending was through "narrow networks," covering healthcare received at a limited number of doctors and hospitals. That has triggered lawsuits against Anthem Blue Cross, a division of WellPoint and the largest Obamacare carrier in California, by customers claiming they were misled about where they could obtain care.
Also, the state did not let people keep plans that did not comply with Obamacare standards. That brought an influx of healthy people that left California "well positioned for modest premium increases," said healthcare policy expert Larry Levitt of the Kaiser Family Foundation.
Insurers not returning in 2015 specialize in Medicaid plans and could not meet new requirements, Lee said.
In the first open-enrollment period, 1.4 million people bought policies on Covered California, and 8 million nationally. The next enrollment period begins Nov. 15.
Reporting by Sharon Begley and Caroline Humer in New York; Editing by Lisa Shumaker and Cynthia Osterman