Thursday, May 23, 2013

CA State Insurance Exchange Covered California Announces Plans and Rates for 2014

SACRAMENTO, CA – Covered California™ today announced 13 diverse health insurance plans that will offer in 2014, affordable, quality health care coverage to millions of Californians. The plans reflect a mix of large non- profit and commercial plan leaders, along with well-known Medi-Cal and regional plans.

The tentative selection of health plans is subject to a rate review by state regulators. It is difficult to make a direct comparison of these rates to existing premiums in the commercial individual market because in 2014, there will be new standard benefit designs under the Affordable Care Act, and the actual change in an individual’s premium will depend on the person’s current insurance coverage. However, Covered California believes that a valuable frame of reference for its premiums, is comparing them to the small employer market in California. Both the small employer market and Covered California are competitive markets, and offer guaranteed issue – you cannot be denied for pre-existing condition.

The rates submitted to Covered California for the 2014 individual market ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions. This is impressive since the 2014 products include doctor visits, prescriptions, hospital stays and more essential benefits; protecting consumers from the "gimmicks and gotchas" of many insurance policies.

“This is a home run for consumers in every region of California,” said Peter V. Lee, Executive Director of Covered California. “Our active negotiating will not only benefit potential enrollees to Covered California, but will benefit all Californians by making health care affordable.”

Additionally, there is financial protection like a maximum out-of-pocket cost of $6,350 which will dramatically reduce the chance of someone going bankrupt because of medical bills not covered by insurance.

“Californians should be proud of how not only health plans in this state, but doctors, medical groups and hospitals have stepped up – and creating a market that will allow millions of consumers to enroll in affordably priced products. Because of that, we will be able to deliver exceptional value, low rates, access to health care in every region of the state, and a solid platform to achieve the dream of providing quality health care for all Californians,” Lee said.

Covered California’s rigorous review and selection process resulted in a portfolio of plans that achieve three objectives: a robust choice of offerings throughout the state, affordable prices, and access to doctors and hospitals. The terms of Covered California’s relationship with its partnering health plans means they will collaboratively work to promote care improvements, foster prevention, and seek to reduce costs by promoting better care.

Once plan rates are approved by state regulators, Covered California looks forward to signing final contracts and beginning the work of enrolling millions of Californians in the following health plans:

• Alameda Alliance for Health
• Anthem Blue Cross of California
• Blue Shield of California
• Chinese Community Health Plan
• Contra Costa Health Services
• Health Net
• Kaiser Permanente
• L.A. Care Health Plan
• Molina Healthcare
• Sharp Health Plan
• Valley Health Plan
• Ventura County Health Care Plan
• Western Health Advantage

"Covered California plans include the largest current health insurers in the individual market, as well as new entrants, regional plans and local Medi-Cal plans that want to be part of making history," Lee said. On average, there will be five plans from which to choose.
Even in rural areas where choice has been historically sparse, there will be two or three health plans. Throughout the state consumers will have a choice of Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Exclusive Provider Organizations (EPOs).

To get prices at such competitive points, winning health plans built their bids around the expectation of high enrollment, not high profit. Plans reduced profit margins down to two and three percent; embraced Affordable Care Act programs such as Accountable Care Organizations and Patient-Centered Medical Homes, that seek to improve care while lowering costs; found common ground with doctors, medical groups and hospitals on lower reimbursement rates to make care affordable.

Virtually every health plan designed a custom network for Covered California. Negotiations included a detailed review of each plan’s rates, their mix of hospitals, physicians and other providers, and their contingency plans for expanding networks in the event more consumers sign up than expected.

The current list of insurers is for individual policies only. Covered California will announce its options for small businesses to buy health insurance in June.

About Covered California

California was the first state to create a health benefit exchange following the passage of the federal health care law. Covered California is charged with creating a new insurance marketplace in which individuals and small businesses can get access to health insurance. With coverage starting in 2014, Covered California will help individuals compare and choose a health plan that works best for their health needs and budget. Financial help will be available from the federal government to help lower costs for people who qualify on a sliding scale. Small businesses will be able to purchase competitively priced health plans and offer their employees the ability to choose from an array of plans and may qualify for federal tax credits. Covered California is an independent part of state government whose job is to make the new market work for California’s consumers. It is overseen by a five-member board appointed by the Governor and Legislature. For more information on Covered California, please visit

Tuesday, May 7, 2013

Must Read for all Californians re State Health Insurance Exchange

San Francisco Chronicle by Patrick Johnston -

May 5, 2013:

Over the next month, Californians will begin to get a clearer picture of the historic changes the Affordable Care Act will make in the state's insurance market for individual plans as it expands coverage to millions of the state's uninsured residents.

The state is scheduled to start providing the details about the health plans that will be offered through Covered California, a new competitive marketplace for individual, families and small businesses purchasing coverage.

Through Covered California, these Californians can begin purchasing insurance plans on Oct. 1 that will more resemble employer-provided insurance than the bare-bones coverage they may have had in the past.

The plans will go into effect on Jan. 1, and will offer more comprehensive coverage and smaller out-of-pocket expenses for deductibles and co-pays. Pre-existing conditions will no longer be taken into consideration, lifetime limits are eliminated, and subsidies will be available for individuals earning up to $46,000 and for families with an income of up to $94,200.

This will mean that many individuals will pay less for coverage than they did before the new federal law, but some Californians will face higher health insurance premiums.

Those on the lowest end of the income scale could see their premiums decline by as much as 84 percent, according to a report commissioned by Covered California.

But middle- and upper-income Californians who buy their coverage in the individual market and who don't qualify for the subsidies could face premium increases of as much as 30 percent, the report said. This could be especially true in San Francisco, with its higher median income and growing ranks of self-employed entrepreneurs, who will be seeking insurance in the individual market.

Among the reasons for the higher premiums for these Californians is the shift of out-of-pocket costs into premiums - that is, Californians will have lower co-pays and deductibles because the premiums will absorb more of the underlying cost of care. This shift ultimately could save money for people who use medical services more frequently. Families earning less than $60,000 a year, for example, could save up to 76 percent on the cost of care.

Providing more comprehensive benefits also means Californians in the individual market may pay more than they have before because the plans contain additional benefits - including benefits they might never use, such as pediatric dental care for beneficiaries who have no children.
Younger people may also lose some of their price advantage because of changes in the ways health plans calculate benefits. Because they were considered to be healthier, younger beneficiaries previously paid less than older people. Under the new plan, they will still pay less than older Californians but they will pay more than before. The report estimated these changes would cause Californians under age 25 to face, on average, up to a 25 percent higher premium, while older people would see an increase of about 12 percent if they don't qualify for subsidies. The report suggested that on average, individual premiums in California would rise 9 percent.

While these subsidies will help reduce premiums for some 2.6 million Californians, they won't reduce the underlying cost of care, which continues to outpace inflation by almost 250 percent. These underlying costs often are outside health plans' control, including the rising cost of hospitalization, doctors' visits, medical tests, prescription drugs and other health care services.

Among the many reasons for the rising costs are unnecessary tests, procedures and drugs, which experts say consume about $1 of every $3 spent on health care. We are an aging population, and older people have more costly medical needs. Also, about 40 percent of adult Californians live with at least one chronic condition, and chronic conditions account for more than 75 percent of all heath care costs.

Health plans are working to reduce costs by providing wellness programs. They offer free counseling for depression, quitting smoking, losing weight, eating healthier and reducing alcohol use. They're also limiting their overhead to about 11 cents out of every $1 in premiums. Plans are also working collaboratively to more closely align quality and payment in medical treatment and to improve cost transparency for consumers.

The federal Affordable Care Act and state law place tight limits on profits by requiring health plans to spend 80 to 85 cents out of every $1 in premiums on doctors' and hospitals' bills, prescription drugs, tests and other health care services for their members.

If the plans fall short of that requirement, then they must provide a rebate. California commercial plans exceeded those requirements by spending, on average, 89 cents out of every $1 in premiums on medical care.

California health plans' net profit margins are far less than others in the industry, averaging just 3.6 percent annually. Other sectors of health care, such as the pharmaceutical industry, benefited from net profit margins of up to 16.7 percent, according to Yahoo Finance data.

While the federal health care law will expand coverage, increase benefits and make many other changes to help Californians, it does not do enough to address the rising cost of care that continues to drive up the price of premiums.

The prescription for curing our health care system calls for more cooperation among all of us - elected officials, hospitals, physicians, patients and insurers - to lower the underlying costs of care so that we can ensure coverage is affordable.