Health insurers line up to compete in California’s exchange
California’s health insurance exchange said more than 30 plans are expected to vie with one another for spots in the state-run marketplace opening next fall.
State officials, and those in other states, are eager to flex their purchasing power under the federal healthcare law by selecting only certain individual and small-business health plans for 19 different regions across California.
The exchange, branded Tuesday as Covered California, will negotiate with insurers for the best rates and will assist consumers and small businesses in choosing a plan by separating them into five categories based on cost and level of benefits.
“There will be a lot of competition and interest, which will enable the exchange to be an active purchaser in every region and pick the best five or six plans,” said Peter Lee, executive director of the California exchange.
“The plans we will be offering in San Diego will be very different from the set of plans in Sacramento or Los Angeles,” said Lee, a former Obama administration healthcare official.
Insurers who aren’t chosen to be among the exchange’s plans can still offer policies outside the exchange. But many people seeking coverage are expected to go through the exchange because they can get government financial and educational assistance.
The exchange’s five-member board picked the Covered California name after testing several monikers with consumer focus groups. The tentative tag line is: “Your destination for affordable healthcare.” Other finalists included Eureka, Ursa and Avocado.
“Covered is an action verb, and if we do our job, that’s what we want to happen,” said Robert Ross, an exchange board member and chief executive of the California Endowment.
Overall, Lee said, 33 insurers and other organizations have expressed a nonbinding interest in bidding for business through the exchange. As many as 13 plans may bid in the Los Angeles area, and about 20 plans have signaled interest for the San Francisco market, according to the exchange.
California’s four largest insurers in the individual market — Kaiser Permanente, Anthem Blue Cross, Blue Shield of California and Health Net Inc. — have indicated interest in the exchange. Smaller insurers and large hospital systems may offer health plans in specific areas.
Officials are expected to pick the winning health plans and negotiate rates by June. Consumers will start enrolling in the exchange next October for policies taking effect in January 2014.
The exchange is responsible for enrolling nearly 2 million new people in Medi-Cal, the state’s Medicaid program for the poor and disabled, and helping an additional 2 million Californians purchase coverage with federal subsidies earmarked for families earning about $92,000 or less annually.
A family of four in California earning $70,275 would have to pay about $556 a month for subsidized coverage, according to the Kaiser Family Foundation.
Industry officials say they welcome the increased competition.
“The exchange has a very complicated job selecting plans in regions,” said Patrick Johnston, chief executive of the California Assn. of Health Plans. “We are working with them and we want to emphasize that affordability matters most.”
The ability of the exchange to lower healthcare costs remains unclear. Experts said average premiums could rise in the exchange because the Affordable Care Act requires improved benefits, but consumers’ out-of-pocket medical costs could decrease under those same changes.
California insurance officials have expressed concern about substantial rate hikes for some existing policyholders going into the exchange.
Under a new rating map approved by state lawmakers, the Department of lnsurance estimated that premiums for similar coverage could increase as much as 25% in West Los Angeles, 22% in the Sacramento area and nearly 13% in Orange County.
Janice Rocco, the state’s deputy insurance commissioner for health policy, said her agency is pushing a new rating map that would cap increases at 8%. That proposal could be considered during a special legislative session in the coming months.
“We want to minimize the rate spikes,” she said.
Lee said the exchange is comfortable with the current rating regions, but it’s open to legislative changes.
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