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Covered California Announces Record-Low Rate Hike for 2021

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Premiums for health plans sold through Covered California, the state’s Affordable Care Act insurance exchange, will rise an average of 0.6% next year — the smallest hike since the exchange started providing coverage in 2014, the agency announced Tuesday.

The modest increase follows an average statewide increase of 0.8% on coverage that started in January of this year, which was the previous record low.

The rate changes will vary across regions, ranging from an average increase of 5.6% in Santa Clara County to reductions of 2.1% in southwestern Los Angeles County and 2.6% in Mono, Inyo and Imperial counties.

Before the announcement, some industry observers had called for rate cuts, given the windfall health plans have reaped so far this year from lower spending on care. The COVID-19 pandemic shut down elective surgeries in the spring and has continued to sharply reduce patient visits to doctors, emergency rooms and outpatient clinics.

But Peter Lee, Covered California’s executive director, told California Healthline that lower spending by insurers due to the pandemic had “very, very little” impact on 2021 premiums.

Covered California’s insurance carriers “are seeing their health care costs rebound and are projecting that for the balance of the year they will catch up on the health expenses they thought they were going to spend for 2020,” Lee said. Health plans in the exchange projected increases in non-COVID medical costs of 4% to 8% next year and did not think they needed to budget extra for the pandemic, he said.

The rate increase was modest mainly because of a surge of new, “healthier” enrollees both during the regular enrollment period for 2020 coverage and the current “special” enrollment period — recently extended to Aug. 31 — for people whose coverage has been affected by the pandemic, Lee said. Covered California said an analysis of the medical risk and demographics of these newcomers showed “they are healthier on average than the equivalent cohorts from 2019.”

Other factors, it said, include the repeal of a federal tax on health plans, which reduced 2021 premiums by an average of 1.7%, and a cut next year in the “participation” fee health plans pay Covered California, from 3.5% of premiums to 3.25%.

Covered California provides coverage for about 1.5 million Californians who buy their own insurance. About 90% of them receive financial assistance from the federal or state government, or both, to help them pay for their premiums. The plans on the exchange are mirrored on the open market, where individuals buy insurance without financial assistance.

Some health system experts believe insurers will continue to spend less on patient medical care next year. Glenn Melnick, a professor of public finance at the University of Southern California’s Sol Price School of Public Policy, said last week that hospital volumes — especially emergency room and outpatient visits — still lag pre-COVID levels and could continue to do so until an effective vaccine is available.

Michael Johnson, a health insurance industry observer and critic who worked as an executive at Blue Shield of California from 2003 to 2015, said the modesty of 2021 premium rises seen in other states so far didn’t go far enough.

“Regulators should be forcing these plans to justify why they are not reducing rates, given the effect we’ve seen the pandemic is having so far,” Johnson said last week.
The average statewide increase among Covered California carriers is smaller than what’s been proposed in many other states.

A KFF analysis last month of proposed 2021 rates in the exchanges of 10 states and the District of Columbia showed a median increase of 2.4%, with changes ranging from a hike of 31.8% by a health plan in New Mexico to a cut of 12% by one in Maryland. (Kaiser Health News, which produces California Healthline, is an editorially independent program of KFF.)

This year’s rate announcements come as the Affordable Care Act remains under threat from a federal lawsuit by Republican officials in 18 states, joined by the Trump administration, who want to repeal it. If they prevail, more than 20 million people could lose their health coverage and popular consumer protections afforded by the ACA, including the ban on health plan discrimination against people with preexisting medical conditions, could be eliminated.

The Supreme Court plans to hear the case in the fall.

All 11 insurance companies operating in Covered California this year will remain in 2021, and no new ones will enter the marketplace. But Anthem Blue Cross and Oscar Health Insurance will expand their offerings geographically, the exchange said. Anthem will enter Inyo, Kern, Mono and Orange counties. Oscar will join the competition in San Mateo County. Many of the Covered California health plans are available only in certain regions of the state.

Kaiser Permanente is the largest carrier in the exchange, with about 526,000 enrollees this year, more than one-third of the total. Kaiser is followed by Blue Shield of California, with 392,000, and Health Net, with 232,000. Information on rate changes by individual carriers was not immediately available.

Rates differ not only from carrier to carrier and region to region, but also by the covered person’s age. Premiums also differ by benefit level, from the cheaper “bronze” coverage tier up to the highest, known as “platinum.” The lower the premium, the higher the deductibles and coinsurance payments for care.

The individual deductible for the bronze tier in 2021 is set at $6,300, unchanged from this year. For the silver tier, the second-cheapest level of coverage, the full individual deductible in 2021 will be $4,000, also unchanged from this year. But many silver enrollees are in plans that offer financial aid to reduce their share of medical costs, and that can push the 2021 silver deductible as low as $75.

Moreover, numerous medical services are not subject to the deductible in silver plans, including primary care and specialist visits, lab tests, X-rays and other imaging. In bronze plans, the first three primary care visits are not subject to the deductible.

Covered California said that, on average, exchange enrollees who plan to renew for 2021 can save 7.3% on premiums by switching to the least expensive plan in the same tier of coverage.

The 2021 rates are subject to final review by the state’s Department of Managed Health Care and Department of Insurance, but significant changes are unlikely.
The enrollment period for 2021 coverage starts Nov. 1 and runs through Jan. 31.


This KHN story first published on California Healthline, a service of the California Health Care Foundation.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

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By: Bernard J. Wolfson
Title: Covered California Announces Record-Low Rate Hike for 2021
Sourced From: khn.org/news/covered-california-announces-record-low-rate-hike-for-2021/
Published Date: Tue, 04 Aug 2020 17:00:51 +0000

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Ends-of-the-World Every Year Since 1970

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There always has been and always will be a reason not to invest or not to stay invested. This is all the mainstream media reports to us. Below you will find a list of some of the worst global events each year since 1970. I have some commentary to follow.

1970: War: US troops invade Cambodia.
1971: Civil Unrest: Anti-war militants march on Washington.
1972: Political: Start of Watergate Scandal.
1973: Economic: OPEC raises oil prices in response to US involvement abroad.
1974: Political: Nixon resigns as President of the United States.
1975: Political: Multiple assassination attempts on President Ford.
1976: World: Ebola virus.
1977: Political: Government shutdowns.
1978: Market: U.S. Dollar plunges to record low against many European currencies.
1979: World: Iranian militants seize the U.S. embassy in Teheran and hold hostages.
1980: Economic: Inflation spiked to a high of 14.76%.
1981: Political: President Reagan assassination attempt.
1982: Economic: Recession continues in the U.S. with nationwide unemployment of 10.8%.
1983: Economic: Unemployment in the U.S. reaches 12 million.
1984: Economic: 70 U.S. banks fail during the year.
1985: World: Multiple airplane hijackings around the world.
1986: World: Chernobyl Nuclear Power Station explodes.
1987: Market: DOW drops by 22.6% on October 22.
1988: Environment: Awareness of global warming and the greenhouse effect grows.
1989: Environment: Exxon Valdez dumps 11 million gallons of crude oil into Prince William Sound.
1990: World: Persian Gulf War starts.
1991: World: Mass shooting in Killeen, TX.
1992: Human Rights: Los Angeles riots following the death of Rodney King.
1993: Terrorism: World Trade Center bombing.
1994: World: Mass genocide in Rwanda.
1995: Terrorism: Oklahoma City bombing.
1996: Terrorism: Olympic Park bombing.
1997: World: Bird flu.
1998: World: Multiple U.S. embassy bombings.
1999: World: Columbine shooting.
2000: Economic: Start of the Dotcom Market Crash.
2001: Terrorism: Terrorist Attacks in NYC, DC & PA.
2002: Economic: Nasdaq bottomed after a 76.81% drop.
2003: World: The U.S. invades Iraq.
2004: World: The U.S. launches an attack on Falluja.
2005: World: Hurricane Katrina
2006: World: Bird flu.
2007: Economic: Start of the Great Recession.
2008: Economic: Great Recession continues.
2009: Economic: S&P bottomed after a 56.8% drop.
2010: Market: Flash crash.
2011: Market: Occupy Wall Street and S&P downgrades U.S. Debt.
2012: Political: Fiscal cliff.
2013: Political: Taper tantrum.
2014: World: Ebola virus.
2015: World: Multiple mass shootings.
2016: Political: Divided U.S. Presidential election.
2017: World: North Korea testing nuclear weapons.
2018: Economic: U.S. & China trade war.
2019: Economic: Student loan debt reaches an all-time high of $1.4 trillion.
2020: World: COVID-19.

While many of these events were undoubtedly terrible (and there are certainly others not named here that were worse), most of these were broadcast as end-of-the-world events for the stock market. Despite that attention, it is worth noting that these were, for the most part, one-time events. In other words, most faded into the newspapers of history. We moved on.

Obviously, some caused monumental shifts in the way the world works. Just think about how much air travel continues to be impacted by the events of 9/11. But, outside of the resulting inconveniences (if we want to call safety protocols inconveniences) associated with air travel, flying is safer than ever before.

Take a look at just about any of the events and you will find there are many that people will hardly remember. My point here isn’t that these events are to be ignored or that they were easy to stomach at the time, but that they have become a distant memory.

I want to also make the point that we should expect these types of negative events. As investors, we know these types of crises, economic catastrophes, and global phenomena are going to happen.

But in almost all cases, here is what we can say in the next breath – this too shall pass.

Will there be legal, humanitarian, economic, or some other aid required as a result of these events? Almost certainly the answer is yes, but that doesn’t mean it they won’t eventually fade into history.

Lastly, what’s worth noting is how the market has performed over these last 50 years despite the continual advertisements of the world crashing down around us. On January 2, 1970, the Dow Jones stood at 809 and the S&P at 90 -> those are not typos. These same indexes have grown (not including dividends) to 26,387 and 3,232 respectively. Amazing, no?

Perhaps what gets overlooked more than anything else is what separates the above one-time negative events from the positive stories that go largely ignored over our lifetimes. And that is a story worth telling. See the companion post below:

Unheralded Positive Events Every Year Since 1970

Stay the Course,
Ashby


Retirement Field Guide Mission:

“To help 10 million people make better retirement decisions.”


If you would like to join us in achieving our mission, I hope you will consider sharing our site if you have found it helpful in your own retirement planning.


This post is not advice. Please see additional disclaimers.

The post Ends-of-the-World Every Year Since 1970 appeared first on Retirement Field Guide.

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By: Ashby Daniels, CFP®
Title: Ends-of-the-World Every Year Since 1970
Sourced From: retirementfieldguide.com/ends-of-the-world-every-year-since-1970/?utm_source=rss&utm_medium=rss&utm_campaign=ends-of-the-world-every-year-since-1970
Published Date: Tue, 04 Aug 2020 13:26:19 +0000

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Wildfire prone property insurance bill in California due for hearing

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The post Wildfire prone property insurance bill in California due for hearing appeared first on Live Insurance News.

The bill is expected to be heard in upcoming weeks as opposing sites prepare for major battle.

A new California bill, the outcomes of which will have a lot to say about coverage for wildfire prone property in the state, will soon be headed for hearing. The hearing is expected to be a heated one as strong opposing opinions have the opportunity to be voiced.

Opponents of this bill are calling it a direct attack on consumer protections in insurance.

That said, proponents of the bill claim it is the best method for making coverage available to wildfire prone property in California. The bill in question is Assembly Bill 2167. It was written by Assemblyperson Tom Daly (D-Anaheim). If it passes,it will create the Insurance Market Action Plan (IMAP) program. The IMAP program is meant to protect residential properties.

So far, AB 2167 has progressed quickly, when taking into consideration that a chunk of the legislature has been considerably restricted by pandemic crisis precautions. It was first presented in early June and backers have been saying that it was brought forward in good timing and that it has all the momentum it needs to be passed.

That said, AB 2167 has not been without opposition. In fact, it has faced considerable opposition, having been called an attack on Proposition 103, insurance consumer protection law. California Insurance Commissioner Ricardo Lara lobbed that argument at it, calling it an “insurance industry wish list, with nothing to help consumers,” and Consumer Watchdog, whose founder, Harvey Rosenfeld, was the original author of Proposition 103.

The insurance industry strongly supports the bill, saying it will help wildfire prone property coverage.

Insurance organizations such as the American Property Casualty Insurance Association and the Personal Insurance Federation both support AB 2167. The bill also has the support of the California Association of Counties (CSAC), as well as Fire Safe Councils of California, and the CalFIRE union.

The Consumer Federation of America, another watchdog organization, has predicted that if AB 2167 passes, it will cause 40 percent increases in insurance rates. On the other hand, insurance groups claim that the bill offers owners of wildfire prone property a greater opportunity for choice and competition among insurance companies based on coverage and premiums while avoiding the limitations and high costs associated with FAIR Plan coverage.

The post Wildfire prone property insurance bill in California due for hearing appeared first on Live Insurance News.

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By: Marc
Title: Wildfire prone property insurance bill in California due for hearing
Sourced From: www.liveinsurancenews.com/wildfire-prone-property-insurance-bill-in-california-due-for-hearing/8549884/
Published Date: Fri, 14 Aug 2020 09:00:14 +0000

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Is this the last hurrah for bonds?

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Recently, I have written quite a bit about the long-term return expectations for investing in bonds. See here, here, here and here.

Spoiler alert: I don’t think it’s good.

But long-term bonds this year have been quite an amazing story as the COVID pandemic has caused the Fed to take historically monumental actions. As a result, we’ve watched long-term Treasuries tear the roof off the market. For instance, a 20+ Year Treasury Bond ETF (name withheld for compliance purposes) is up more than 31% YTD as of July 31st.

That is insane!

But there is a good reason for this increase shown below.

The red circle shows a decrease in the 30-year Treasury rate of almost 40% over a span of six months. That’s practically unprecedented with only two periods (2008 and 1981-1982) having similar declines over such short periods.

But this begs the question: Is this the last hurrah for bonds as a driver of any meaningful return? Below is the 30-Year Treasury rate over the last 40+ years.

For what it’s worth, people have been forecasting the end of the bond bull market since 2012 (maybe even earlier) and yet it has continued despite those predictions. But at some point, the bond party will come to an end.

The Fed has been clear that they are going to keep rates stable until at least 2022 which means this may not change for a little while longer. Or in the near term, I could even see the high returns continuing if we experience pandemic economic shutdown round two.

But, I can’t see a world where this is the case for much longer than that – most importantly over the span of a 30-year retirement.

The official end of the bond bull market depends on a recovery from the pandemic economy as well as a few other factors causing rates to rise. But when they do, it seems likely to me that this may be the last great hurrah for bonds for quite some time.

The question is when to get off that train and that undoubtedly requires a personal answer.

Stay the Course,
Ashby


Retirement Field Guide Mission:

“To help 10 million people make better retirement decisions.”


If you would like to join us in achieving our mission, I hope you will consider sharing our site if you have found it helpful in your own retirement planning.


This post is not advice. Please see additional disclaimers.

The post Is this the last hurrah for bonds? appeared first on Retirement Field Guide.

—————–

By: Ashby Daniels, CFP®
Title: Is this the last hurrah for bonds?
Sourced From: retirementfieldguide.com/is-this-the-last-hurrah-for-bonds/?utm_source=rss&utm_medium=rss&utm_campaign=is-this-the-last-hurrah-for-bonds
Published Date: Wed, 12 Aug 2020 13:47:16 +0000

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