How much will my health insurance increase due to new taxes in California
California passed new taxes that could raise medical premiums. We explain how much you could pay and how to calculate the increase
Millions of people in California could see changes in the price of their private health insurance after the passage of a new state tax on health plans. Although the measure is not charged directly to patients, insurers could pass that cost on to their customers through higher premiums. The question many are asking now is simple: if I pay a certain amount for my coverage today, how much could I pay later?
The new tax seeks to generate resources to maintain funding for Medi-Cal, California's public health program. However, private health insurance plans could assume a greater financial burden and reflect part of that expense in the monthly payments of their members.
According to the California Legislative Analyst's Office (LAO), if insurers fully pass on the cost of the new tax to consumers, health insurance premiums could increase about 1.5% per month.
The measure establishes a fee of $8.85 per month per member, a cost that would represent close to $1.5 billion per year for private plans.
Based on that increase, the California Association of Health Plans (CAHP), a health insurer lobbying group, estimates the impact could be about $100 more per year per person and about $400 more per year for a family of four.
Charles Bacchi, president of the California Association of Health Plans, explained that these types of taxes are usually incorporated into the final cost of insurance.
"That's just actuarial science. So when you raise taxes on health plans and insurers, that gets rolled into the premiums and the customer pays for it," said Charles Bacchi, president of the California Association of Health Plans.
How much would my health insurance increase with the new tax?
The increase will depend on how much you currently pay for your plan. Not everyone will have the same increase, because premiums change depending on age, the city where you live, the type of coverage, and whether you receive financial assistance.
For example, according to Cover Health California estimates, a 40-year-old adult with an unsubsidized Silver plan could pay between $500 and $600 per month. If we take an average premium of $550 per month as a reference, a 1.5% increase would represent about $8.25 additional dollars each month.
In that case, the person would have to pay approximately:
This example matches the estimate of about $100 additional dollars per year per person.