California isn't the first state to announce premium rates and vendors in a new health benefit exchange, but the announcements this week from Covered California may carry more clout than those already announced -- and probably more than those yet to come.
Covered California announced which health insurance plans will be offered and how much they'll cost when the new insurance marketplace opens for business this fall. It is another milestone in California's race to be ready for full implementation of the Affordable Care Act next year.
"Everyone will be watching what goes on in California," said Charles Bacchi, executive vice president of the California Association of Health Plans.
"California has been a trendsetter for decades and people all over the country pay attention to what happens here. I think they will this week as well," Bacchi said.
The White House welcomed California's rate announcements which were lower than experts had predicted, according to an Associated Press report Thursday.
"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," said Tara McGuiness, a senior White House communications adviser.
The exchange will offer plans from 13 insurers in different tiers of coverage. Not all plans will be available in all of the state’s 19 rating regions, and prices for similar coverage may vary from region to region.
The state’s largest insurers -- including Anthem Blue Cross, Blue Shield, Health Net and Kaiser Permanente -- are participating in the exchange. Other large national insurers are not, including Aetna, Cigna and UnitedHealth.
Exchange officials offered a couple of sample scenarios to judge how much monthly premiums will cost:
- A San Francisco resident earning more than $46,000 a year can choose from five plans with monthly premiums ranging from $221 to $501.
- A Fresno resident earning $15,400 a year will be eligible for a federal subsidy, can choose from four plans and will spend between $53 and $102 on monthly premiums.
Plan details and a statewide booklet available online can help consumers find which plans are offered in their regions, compare costs and determine who is eligible for federal subsides.
Dana Howard, spokesperson for Covered California, said most people who are already buying their own health insurance will pay less through the exchange and those who do pay more will have better coverage.
"The majority of people are going to pay less," Howard said. "For some people it won't be drastically different. For those who have no insurance at all, it will be a major change and many will get government subsidies.
"And those few who may pay more will get richer coverage," Howard said.
"We believe people are going to look at this and say 'This is excellent.' We think it will bring peace of mind to a lot of people," Howard said.
Small but Influential Slice of the Pie
Covered California will provide coverage for the relatively small segment of Californians who buy health insurance on the individual market or have health insurance through a small employer. Only about 6% of the state's 39 million people currently get insurance coverage on their own. Most get coverage in large group plans through employers.
But the arrival of federal health reform will change things. About 5.3 million people will be eligible for coverage through Covered California -- more than 13% of the state. Not only will more of the state's population get coverage through the exchange, but the public competition in Covered California may influence coverage and premiums in group markets as well.
Some health care experts expect that new public comparisons and competitions such as those in Covered California will eventually lead to statewide and national pressure to reduce costs and improve coverage.
Neither Bacchi nor Howard wanted to comment on the far-reaching implications of this week's announcements. That's not to say they didn't think there would be any, but no one's sure what they might be.
"The large group market was largely untouched by the ACA," Bacchi said. "These rates announced this week will be noteworthy. It will be the first time we see what the cost is for implementing this new law, and we'll also see what competition is out there. But it's hard to go all the way from there to how it might influence large group insurance. It's a bit too early for that," Bacchi said.
"We believe it will have a huge impact in California -- for the individual market in California -- but I'm not going to make any projection about what impacts it may have beyond that," Howard said.
In another measure of the exchange's influence and potential trend setting, Covered California will become the first state health insurance marketplace to offer voter registration.
Californians will get the chance to register to vote when they shop for health insurance beginning in October. The Secretary of State formally designated Covered California as a voter registration agency this month.
Premiums Announced in Oregon, Maryland
Although California was the first state to authorize and launch a health insurance exchange after the federal reform legislation was passed and signed into law, other states have caught up. Exchanges in Maryland and Oregon have already announced premium rates in their exchanges.
In Oregon, the announcement earlier this month triggered a new, immediate round of competition. According to reports released two weeks ago, two Oregon insurers asked to resubmit their premiums after the rates became public.
In Maryland, where exchange premiums were announced last month, the state's dominant insurer, CareFirst BlueCross BlueShield, said policies for individuals will rise an average of 25% next year. That was considered good news in a state where premiums were expected to jump by 50% or more.
Covered California officials discourage comparing rates in one state to another.
"It's not a good thing to compare our rates to what's happening in Oregon or any other state," Howard said. "There are too many variables -- different demographics, different rates in different regions. It's too complex for simple comparisons."
Effort Underway To Get Exchange To Reveal More
This week's announcements come with the backdrop of a legislative effort to get Covered California to divulge more information.
A bill with bipartisan support would remove provisions in Covered California's bylaws that allow the exchange to keep some data secret. The bill (SB 332), by Sens. Bill Emmerson (R-Redlands) and Mark DeSaulnier (D-Concord), was introduced this month shortly after the Associated Press reported that California's exchange has more options to keep secrets than other state exchanges.
When writing legislation that created the exchange three years ago, California lawmakers gave exchange officials the authority to keep contracts secret for one year and to keep financial data concealed indefinitely.
"It should all be transparent," Emmerson told the AP. He said Covered California was given authority "to do things no one else could do. There was no sunlight on it."
Bids for government contracts are commonly kept secret until contracts are awarded, but once awarded, bidders and amounts are typically divulged.
An AP review of the 16 other states building their own state-run exchanges found the California agency has the most leeway for secrecy and that some specific exclusions from open-records laws might run afoul of the state constitution.
Covered California will spend more than $450 million on contractors by the end of next year, according to state documents.