The Plans Are Picked

Sacramento, CA – The Associated Press reports the state’s largest health insurers, including Anthem Blue Cross, Blue Shield and Kaiser Permanente, will be among 13 plans competing for policies on California’s new health care exchange. Officials with Covered California, the state agency running the health insurance marketplace, on Thursday announced the plans and prices that will be offered by private insurers when the exchange begins enrolling customers in October. Coverage begins Jan. 1 and you will be required to have health insurance or pay a penalty.

The AP says the announcement marks the first time Californians are getting a clear picture of the health plans and prices offered under the new health care rules in President Barack Obama’s Affordable Care Act. An estimated 5.3 million Californians will be able purchase insurance through Covered California.

Health Policy experts say the rollout in the nation’s most populous and diverse state is important because it demonstrates how the Affordable Care Act will work on a large scale.

“California really demonstrates that the concept of an exchange can work by really increasing head-to-head plan competition,” said Caroline Pearson, vice president of Avalere Health, a Washington, D.C., data analysis firm catering to the health care industry and government. “It brought a lot of carriers into the market. It brought the premiums down. It was sort of the best example of the market working.”

Other states running their own insurance exchanges have already announced the plans they will offer. Oregon offers 16 plans, Colorado has 10 and Washington has nine.

The AP reports the White House welcomed California’s options as it tries to allay fears about potential rate shocks when the Affordable Care Act takes full effect next year. The rates offered in many plans turned out to be lower than previous estimates, state officials said.

“Given that California, the largest insurance market in the nation, has robust competition and a wide range of affordable plans that bodes very well for the marketplaces across the country” Tara McGuinness, a senior White House communications adviser, said in an email.

The exchanges offer individuals and small businesses a choice of private insurance plans similar to those already offered to workers at large companies. The AP says intent is to provide affordable plans with an annual cap on out-of-pocket expenses and guaranteed coverage despite someone’s medical condition.
The lowest-income people will be referred to public safety net programs, while some 2.6 million middle-income residents will qualify for federal subsidies to help pay their premiums.

Covered California provided examples of what a 40-year-old would pay depending on income and where that person lives.

A San Francisco resident earning more than $46,000 a year will be able to choose among five plans with a monthly premium ranging from $221 to $501.

Meanwhile, a 40-year-old resident in Fresno who earns about $15,400 a year will be able to pick from four plans and will be eligible for federal subsidies. That person can expect to spend between $53 and $102 on premiums each month on a middle-of-the road plan.

Peter Lee, executive director of Covered California, said the state did its best to negotiate competitive rates. But he also said it was important that the exchange made financial sense for insurers so it would attract enough plans to give customers access to a good network of doctors and hospitals.

“We want Goldilocks pricing,” Lee said Thursday. “We don’t want prices too high, but we also want to make sure there’s enough money so patients can get the care they need.”

The maximum out-of-pocket cost per year for most plans will be $6,350 for an individual and $12,700 for a family. Health advocates said the new insurance plans will also be more comprehensive, making comparisons to current plans and premiums difficult.

Officials running the state’s exchange divided California into 19 regions for rate-setting purposes. Aside from where a person lives, insurers are limited in their ability to charge consumers different prices for health care. On average, there will be five plans to choose from in each region of the state. Rural areas will have two or three, according to Covered California.