California health exchange reveals premium costs, insurers
Published Friday, May. 24, 2013 - The Sacramento Bee
California's newly created health exchange announced the bottom line
on its insurance policies and rates Thursday, bringing sharper focus to family
impacts of next year's health care overhaul.
Thirteen companies were selected to sell policies for the individual market
through Covered California, a state-owned marketplace for comparing prices of
coverage with identical benefits but different networks of doctors.
"We've hit a home run for consumers because we have affordable rates, we have
better coverage and real choice for consumers across the entire state," said
Peter V. Lee, director of Covered California.
Anthem Blue Cross, Blue Shield of California, and Kaiser Permanente, three
of the state's largest insurers, were among firms chosen by Covered California
to sell policies this fall, subject to rate review by state regulators.
Others chosen to compete in all or parts of California were Health Net,
Western Health Advantage, Molina Healthcare, Alameda Alliance for Health, Contra
Costa Health Services, and the Sharp, Valley, L.A. Care, Chinese Community, and
Ventura County health care plans.
Three major insurers – Aetna, Cigna and United Healthcare – opted not to sell
policies on the exchange's individual market, sparking concern that lack of
competition could lead to a handful of massive firms driving up prices in the
future.
"Look, everyone can cheer that we finally have a place where people can buy
policies if they have pre-existing conditions," said Jamie Court, president of
Consumer Watchdog and leader of an effort to allow state regulation of health
insurance rates.
"The question is how much people are going to pay and whether it's
reasonable," Court said. "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)
rates."
Under next year's federal mandate, nearly all Americans will be required to
have health insurance next year or pay a penalty of $95 or 1 percent of their
income, whichever is more.
Sally Pipes, president of the Pacific Research Institute, said consumers were
promised that a health care overhaul would create plenty of choice – and having
three major insurers sit on the sidelines lessens options, she said.
"It's unfortunate," she said. "I wanted all insurers to be available."
But Betsy Imholz, of Consumers Union, applauded selection of the exchange's
13 firms as "a very significant step toward fixing" a dysfunctional health
insurance market currently marked by "exclusions that run rampant, gimmicks and
gotchas."
"It's an impressive first step that will provide fair, comprehensive and
affordable coverage," Imholz said of the new system, which will let consumers
compare prices of plans offering identical benefits.
Premiums will vary based on age, region, household size and type of coverage
sought.
In the four-county Sacramento region, for example, premiums for basic
coverage – a silver plan – would cost as little as $56 per month for someone
with annual income of $17,235. That same policy would soar to $332 per month for
an individual earning $45,960 per year. Federal subsidies would bridge the
gap.
An estimated 2.6 million Californians will be eligible for federal subsidies
if they buy policies through the exchange. Aid will be offered on a sliding
scale, extending to a family of four earning up to $94,200.
Five tiers of policies will be sold in the individual market by Covered
California: bronze, silver, gold, platinum and catastrophic coverage. The lowest
premiums are for policies with the highest out-of-pocket costs for care – and
vice versa.
Monthly premiums will fall significantly next year for individuals of low or
moderate income who qualify for subsidies. Rates are likely to rise for many
higher-wage earners – though not by the average of 30 percent envisioned in
March by the Milliman consulting firm, Lee said.
"Quite frankly, we've held insurers' feet to the fire," he said.
Lee said cost comparisons cannot easily be drawn, partly because the new
policies cannot deny someone based on a pre-existing medical condition and the
scope of coverage will differ from those now sold in the private market.
"What we see in the rates submitted to us, though, are rates going up far
lower than the best estimate of what Milliman thought might happen – and way
below the worst-case estimates of doom and gloom," Lee said.
State Insurance Commissioner Dave Jones, in a written statement, said "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."
All policies sold on the exchange must cover preventive care, prescription
drugs, contraception, medical screenings – such as mammograms – and other
"essential benefits," including pediatric, mental health, maternity and
rehabilitation services.
Premiums cannot vary by gender, and insurers are not allowed to set a maximum
dollar amount they will pay during a policyholder's lifetime.
Paul Markovich, president of Blue Shield of California, said his firm's
policies are expected to rise by an average of 13 percent next year, partly
because of the mandatory increase in benefits.
"The volume and complexity of this implementation is daunting, and it will be
imperfect – and we will make it work," Markovich said.
California's 19 geographic regions will average five health plans from which
to choose. Even in most rural areas, consumers will have two or three options –
though in a small number of counties only one plan will be available, officials
said.
Call Jim Sanders, Bee Capitol Bureau, (916) 326-5538.
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