Small health plans add choices to state exchange, with mixed results

Four big health insurance companies offer the bulk of choice available to California residents under Covered California, the state’s health insurance exchange.

Anthem Blue Cross, Blue Shield of California, Health Net and Kaiser Permanente are responsible for 95 percent of sign-ups throughout the state, according to California Healthline.

But also sprinkled in the mix are a handful of region-specific plans that offer additional choices for consumers in some parts of the state. These are small nonprofits that are nonetheless considered an important part of the formula for keeping health care costs down.

Low rates encouraged about 14,000 new members to join Chinese Community Health Plan (CCHP) in San Francisco, which more than doubled its membership, said Youngsoo Cho, CCHP’s marketing director.

“We had always been a very cost-effective carrier,” Cho said. “That word was difficult to get out.” The health plan lacked a big advertising budget. But by joining the Covered California market, it put itself on a more equal footing with the big insurers. When they signed up, consumers would learn about its services and low rates. That allowed CCHP to gain more than 28 percent of the market in San Francisco County, the biggest share among all insurers in its region.

Regional health plans are resisting some of the tactics used by larger insurers to lower rates. Sharp Health Plan in San Diego, for example, offered the same network of providers to everyone who signed up to its regional plan.

“There was no confusion, no surprises,” said John Cihomsky, a spokesperson for Sharp HealthCare. Sharp captured almost 11 percent of enrollees in San Diego County.  

In contrast, Molina Healthcare gained only a small share of the Southern California market. But Kamran Hashim, associate vice president of marketplaces for Molina, said the health plan expects to be more competitive in 2015. He said the insurer’s rates have come down and are now among the lowest in the markets it serves in Los Angeles, San Diego, San Bernardino and Riverside counties.

Molina’s rates were high in the first year because it assumed that Covered California would attract a population of previously uninsured people who needed a lot of care. But Hashim says the expected surge in doctor and hospital visits never happened. That helped it to lower rates.

Obviously, low rates are welcomed by consumers. In addition, Molina has tried to remove financial barriers such as tiered co-pays and deductibles for the low-income population it serves. Those are benefits that buck trends set by bigger insurers.

Molina and other nonprofits say they also have more nimbleness in serving low-income populations who may go back and forth between Medicaid and Covered California eligibility. If someone loses Medicaid eligibility but signs up for Molina under Covered California, they don’t have to switch providers. 

That was also the idea of Contra Costa Health Plan when it entered the Covered California market. The plan’s main focus is Medicaid patients. In addition, it wanted to provide options for low-income people who might swing back and forth between the two programs.

By the end of open enrollment in March, less than 1,100 people signed up for Contra Costa’s plan through Covered California. But under the Affordable Care Act, health plans must comply with a myriad of rules and regulations on both the federal and state levels. This year, the Centers for Medicare and Medicaid Services issued a new interpretation of a rule that says that insurers offer the same plan inside and outside the state exchange. But Contra Costa had already exited the commercial market in order to encourage members to join Covered California and, as required by California law, the plan would need to wait five years before re-entering. Much to their frustration, Contra Costa officials said they would have to drop out of the exchange for the coming year.

The regional health plans that remain on the market offer choice and, in some cases at least, lower-cost options than what’s available from big insurers. That suggests that these health plans are helping to make health care more affordable in California. The biggest problem may be that there aren’t enough of them.

Photo by George Miller via Flickr.