Cal­i­for­nia ex­change pro­motes com­pe­ti­tion, even with dom­i­nant play­ers

Modern Healthcare - - REGIONAL NEWS - —Paul Demko

Four in­sur­ers ac­counted for nearly 95% of the 1.4 mil­lion health plans selected by cus­tomers on Cal­i­for­nia’s in­sur­ance ex­change dur­ing the re­cently con­cluded open-en­roll­ment pe­riod. De­spite that con­cen­tra­tion, ex­perts say the ex­change in­creased com­pe­ti­tion in in­di­vid­ual mar­kets around the state.

An­them Blue Cross of Cal­i­for­nia was the most pop­u­lar plan, re­ceiv­ing 30% of en­roll­ments. Blue Shield of Cal­i­for­nia was close be­hind, at­tract­ing 27% of the Cov­ered Cal­i­for­nia ex­change’s cus­tomers. Health Net and Kaiser Per­ma­nente also se­cured sig­nif­i­cant shares of the mar­ket, at 19% and 17% re­spec­tively, Cov­ered Cal­i­for­nia an­nounced re­cently.

None of the seven other plans com­pet­ing for ex­change cus­tomers at­tracted more than 3% of Cal­i­for­ni­ans who selected a plan by April 15.

But in­sur­ance ex­perts cau­tioned that such a con­sumer con­cen­tra­tion should not be viewed as a lack of com­pe­ti­tion in the fledg­ling mar­ket. Many of the ex­change plans with fewer en­rollees were new en­trants that only com­peted for cus­tomers in cer­tain parts of the state, they pointed out. For ex­am­ple, the Chi­nese Com­mu­nity Health Plan at­tracted more than 13,000 cus­tomers, sell­ing plans ex­clu­sively in the San Fran­cisco mar­ket.

The ex­change “gave the op­por­tu­nity for these smaller, lo­cal non­profit plans to jump into the mar­ket and see what they could do,” said Dy­lan Roby,

di­rec­tor of health eco­nom­ics and eval­u­a­tion re­search at the UCLA Cen­ter for Health Pol­icy Re­search.

“In the past, the in­di­vid­ual mar­ket was re­ally run by An­them and Kaiser.”

Glenn Melnick, a health­care fi­nance ex­pert at the Univer­sity of South­ern Cal­i­for­nia, agreed that the ex­change cre­ated more com­pe­ti­tion in the in­di­vid­ual and small-group mar­ket than pre­vi­ously ex­isted. But he cau­tioned that there is not yet enough in­for­ma­tion avail­able to pass judg­ment on the sus­tain­abil­ity of Cal­i­for­nia’s mar­ket­place.

“The big ques­tion is, what are the pre­mi­ums go­ing to be go­ing for­ward?” Melnick said. “What we don’t know is whether the pre­mi­ums they’re charg­ing are enough, and what their losses will be, and how much of those losses will be made up through the risk-cov­er­age mech­a­nisms built into the law.”

Ac­cord­ing to Peter Lee, Cov­ered Cal­i­for­nia’s ex­ec­u­tive di­rec­tor, all 11 plans have in­di­cated that they in­tend to sell

prod­ucts through the ex­change again dur­ing the 2015 open- en­roll­ment pe­riod. In ad­di­tion, three other in­sur­ers have ex­pressed in­ter­est in par­tic­i­pat­ing in the govern­ment-run mar­ket­place.

Nearly 90% of the in­di­vid­u­als who signed up for plans through Cov­ered Cal­i­for­nia were el­i­gi­ble for sub­si­dies. In­di­vid­u­als mak­ing up to 400% of the federal poverty level of $23,850 for a fam­ily of four were el­i­gi­ble for sub­si­dies.

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