Kaiser rates on Calif. exchange plans raising eyebrows

A University of Texas academic has concluded after pouring over Kaiser Permanente's proposed rates for its exchange offerings in California that the high rate on its lowest-cost health insurance plan is not due to the plan's generosity.

Comparing Kaiser's proposed “bronze” offering to its existing plans for healthy young adults, the researcher wrote on The Incidental Economist blog that the new premium, at $205 a month, will be more than double the old premium. Yet the benefits and available provider network (they both used Kaiser) will be essentially the same.

There is one major difference: the newer plan will provide prescription drug coverage. Yet both plans provide an actuarial value of about 60% of overall healthcare costs—the minimum for a bronze plan. “I would be surprised if rate shock in California will be driven to any meaningful extent by increased insurance generosity,” concluded Sam Richardson, an instructor at UT-Austin.

The Los Angeles Times earlier this month reported that “the relatively high premiums from such a strong supporter of the federal healthcare law surprised industry analysts, and it has sparked considerable debate about the company's motives.

“Some experts say Kaiser intentionally bid high to avoid drawing too many customers next year who are sick or who have been uninsured for years and may be costlier to treat,” the paper reported. “Others suspect Kaiser was worried that lower premiums would bring an influx of newly insured patients that could overwhelm its in-house roster of doctors and hospitals.”

Follow Merrill Goozner on Twitter: @MHgoozner