State Exchange Reveals Premium Rates, Participating Insurers
On Thursday, California officials announced aÂ premium rate structure for health plans offered through the state health insurance exchange, saying that prices are lower than what some observers were expecting, the New York Times reports (Abelson, New York Times, 5/23).
In addition, the exchange -- called Covered California -- announced that 13 insurers will participate in the marketplace, out of the more than 32 that had initially expressed interest last fall (Terhune, Los Angeles Times, 5/23).
Covered California primarily will serve individuals and small businesses.
Supporters hope that the exchange will function similar to websites like Amazon and Expedia so that users will be able to chooseÂ among various health plans through an easily navigable online store.
The exchange is expected to open for registration in October, and an estimatedÂ five million people will purchase plans through the exchange in 2014 (California Healthline, 5/23).
In January, exchange officials told Gov. Jerry Brown (D) and the Legislature that health plans offered through Covered California will be classified by "metal ratings" -- including platinum, gold, silver and bronze -- based on the coverage they offer.
The officials said that:
- Platinum plans will offer 90% coverage;
- Gold plans will offer 80% coverage;
- Silver plans will offer 70% coverage; and
- Bronze plans will offer 60% coverage.
Plan members will have to pay out of pocket for the percentage not covered by the plan, according to officials (California Healthline, 2/14).
Exchange officials have divided the state into 19 geographic regions for setting health insurance rates. Each region will have an average of five insurers that offer coverage. According to exchange officials, residents who live in rural regionsÂ will have two or three health plans from which to choose (Los Angeles Times, 5/23).
The 13 health insurers that will participate in Covered California are:
- Alameda Alliance for Health;
- Anthem Blue Cross;
- Blue Shield of California;
- Chinese Community;
- Contra Costa Health Services;
- Health Net;
- Kaiser Permanente;
- L.A. Care;
- Molina Healthcare;
- Sharp Health Plan;
- Valley Health Plan;
- Ventura County Health Care Plan; and
- Western Health Advantage (Sanders, Sacramento Bee, 5/24).
Three prominent health insurers -- Aetna, Cigna and UnitedHealth -- will not participate in the exchange next year (California Healthline, 5/23).
Details of Premium Rates
Exchange officials said that premiums submitted for next year's individual market ranged from 2% higher to 29% lower than the current average premium for small business plans in the state's largest metropolitan areas.
The officials said that to help keep premium rates low, participating health plans reduced their profit margins to about 2% or 3% and negotiated lower reimbursements for hospitals and physicians.
Covered California officials provided an example of the cost of a monthly premium for an individual health plan in a southern Los Angeles County region, saying that a 40-year-old person purchasing a Silver plan would pay:
- $325 for a Kaiser Permanente policy;
- $287 for a Blue Shield policy; and
- $242 for a Health Net policy.
Participating insurers now are required to submit detailed rate filings to state regulators (Los Angeles Times, 5/23).
In 2009, the Congressional Budget Office projected that the average annual rate of exchange plans would be about $5,200. Rates provided by Covered California officials averaged about $3,600 per year, before subsidies (Baker, "Healthwatch," The Hill, 5/23).
Peter Lee -- executive director of Covered California -- said, "We've hit a home run for consumers because we have affordable rates, we have better coverage and real choice for consumers across the entireÂ state." He added, "What we see in the rates submitted to us ... are rates going up far lower than the best estimate of what [analysts] thought might happen -- and way below the worst-case estimates of doom and gloom."
Betsy Imholz of Consumers Union said the exchange's selection of 13 health plans is "a very significant step toward fixing" a health insurance market that currently is marked by "exclusions that run rampant, gimmicks and gotchas."
Paul Markovich -- president of Blue Shield of California -- said, "The volume and complexity of this implementation is daunting, and it will be imperfect -- and we will make it work."
However, Jamie Court -- president of Consumer Watchdog -- said that although "everyone can cheer that we finally have a place where people can buy policies if they have pre-existing conditions," the question remains as to "how much people are going to pay and whether it's reasonable." Court added, "Covered California cannot answer that question when it's left out of a lot of the market and there's no regulator able to" reject insurance rates deemed unreasonable.
Sally Pipes -- president of Pacific Research Institute -- said that having three major insurers not participate in the exchange is "unfortunate," considering that consumers were promised that they would have plenty of choices through the exchange. She added, "I wanted all insurers to be available."
In a statement, California Insurance Commissioner Dave Jones (D) said that "it is premature to hazard an opinion as to how these rates compare to rates in the individual market today or whether they are justifiable" (Sacramento Bee, 5/24).
On Thursday, Capital Public Radio's "KXJZ News" reported on the Covered California ratesÂ (Orr, "KXJZ News," Capital Public Radio, 5/23).
For more coverage on Covered California's announcement, check out today's "Capitol Desk" post.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.