Small Business Insurance Pool To Close
Pacific Health Advantage on Friday said it will shut down its small business health insurance purchasing pool at the end of the year because too many insurance providers have withdrawn from the program, the Contra Costa Times reports.
PacAdvantage was created by the state in 1992 as the Health Insurance Plan for California and was taken over in 1998 by Pacific Business Group. The independent, not-for-profit purchasing pool was intended to make a variety of health insurance plans more available and affordable for businesses with between two and 50 employees.
The health plans cover about 116,000 people in California (Dunai, Contra Costa Times, 8/12).
Earlier this year, Blue Shield of California told PacAdvantage officials that it would withdraw from the program on Dec. 31, 2006, because of financial losses (Chan, Sacramento Bee, 8/12). Blue Shield was the eighth insurer to withdraw from the program since it was created (Yi, Los Angeles Times, 8/12).
Discussions between Blue Shield and the other two remaining insurers in the program -- Kaiser Permanente and Health Net -- did not result in a "financially viable arrangement that would allow for continued participation" of the insurers in the program, PacAdvantage President John Grgurina wrote in a letter to the Managed Risk Medical Insurance Board (PacAdvantage release, 8/11).
Grgurina said PacAdvantage officials are working with state regulators to help ensure "a smooth transition" for employers and workers to other health plans (Rauber, San Francisco Business Times, 8/11). Under the federal Health Insurance Portability and Accountability Act, insurers must sell policies to people who previously had coverage for a minimum of 18 months, Grgurina said (Contra Costa Times, 8/12).
However, Peter Lee, CEO of Pacific Business Group on Health, said, "The underlying health care costs are rising too fast for many small businesses to keep up, and they're going to be dropping coverage" (Colliver, San Francisco Chronicle, 8/12).
In a separate announcement on Friday, Kaiser officials said the HMO would offer replacement options for the 67,000 who received Kaiser coverage through the purchasing pool (San Francisco Business Times, 8/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.