CALIFORNIA ADVANTAGE: LOSES TWO-THIRDS OF ITS BUSINESS
"California Advantage Inc., the much-ballyhooed statewideThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
health plan launched by the California Medical Association last
July, will lose two-thirds of its business next month after
failing to renew a contract with its reinsurance company," San
Francisco Business Times reports. Beginning July 1, California
Advantage "will no longer provide coverage" for 6,327 enrollees
of the Health Insurance Plan of California (HIPC), "a state-
administered insurance pool for small businesses." California
Advantage lost its HIPC business because Toronto-based Swiss Re
Life and Health Ltd. "was unwilling to continue underwriting the
coverage," San Francisco Business Times reports. California
Advantage CEO John Ramey said, "The estimate of the losses were
sufficient (for Swiss) not to want to continue." As a result,
Business Times reports, "California Advantage is withdrawing from
the HIPC, which was once the mainstay of its startup strategy."
Business Times reports that California Advantage -- "a
combination of preferred-provider, point-of-service and
exclusive-provider offerings -- has been troubled by its
continuing inability to meet its own grandiose expectations."
Dr. Jack Lewin, head of the CMA, said late last year that he
expected California Advantage to "approach 200,000 members within
two years." California Advantage currently has 7,500 physician
investors but "just 3,000 enrollees." Tom Sher, president of
Sher Co. Insurance Services, said, "It's very unlikely that they
can survive." However, Ramey said that he did not see the loss
of HIPC business as "a critical blow" to the company
(Barlas/Rauber, 6/16 issue).