Covered California is 1st to counter Trump push

Covered California, the health insurance exchange created under the Affordable Care Act, will take the unprecedented step of offering insurance companies financial incentives, and guardrails, to encourage them to continue selling health plans through its program.

The agency’s board on Thursday approved a proposal to allow insurers to raise premiums more than normal between 2019 and 2021 if they lose more money than expected in 2018 due to federal policy changes, such as a lack of federal enforcement of the health law’s individual mandate. This will allow insurers, in future years, to recoup losses they may see in 2018.

The move by Covered California is an aggressive tactic that has not been attempted by other states, said health policy experts. It

signals that state officials are willing to take bold steps to ensure the exchange remains viable.

The California measure also requires insurers to commit to lowering premiums between 2019 and 2021 if it turns out they make more money than expected in 2018 due to federal policy changes, such as a reinstatement of a federal program that helps insurance companies pay for high-cost patients.

This program is known as reinsurance, and it pools money from all insurers and redistributes it to those that have an especially large number of sick, expensive patients. The program was included in the health law as a threeyear measure that ended in 2016. Insurance companies have been urging Congress to appropriate funds to extend it.

Insurers on Covered California made a profit of 1 to 2 percent over the past four years, said Peter Lee, executive director of Covered California.

“This is not pharmaceutical profits that health plans are making on the individual market,” Lee said. “It is a low-margin business.”

The idea, Lee said, is that if insurers end up making more profit than anticipated, they should pass the money on to customers instead of keeping it.

“Don’t just take it to the bank, take it to consumers for lower premiums,” Lee said.

On the flip side, if insurers see their profit take a bigger hit than anticipated, Covered California wants to offer incentives to stay on the exchange. Having many insurers sell on the exchange gives people more choices in health plans and rates.

“If there are substantial losses for keeping premiums low, we want plans to be able to build their surpluses,” Lee said. “This is a consumer-centered policy to keep plans at the table this year, with rates as low as possible, with the perspective that they, and we, are here for the long haul.”

The board also approved a $5 million, or 5 percent, increase to Covered California’s marketing budget for 2018. It will increase the agency’s spending on ads and other outreach efforts from $106 million to $111 million.

Covered California is the nation’s largest staterun exchange, with 1.4 million people enrolled in plans purchased through it. All 11 insurance companies that sold plans on the exchange this year are returning in 2018. However, Anthem Blue Cross, one of the largest carriers, will scale back its participation significantly. Anthem currently sells in all 19 regions of the state, but in 2018 will serve just three regions — northern counties, Santa Clara County and the Central Valley. That means that 153,000 people on Anthem plans will have to choose another carrier in 2018. Catherine Ho is a San Francisco Chronicle staff writer. Email: cho@ sfchronicle.com Twitter: @Cat_Ho