Four insurers accounted for nearly 95% of the 1.4 million health plans selected by customers on California's insurance exchange during the recently concluded open-enrollment period. Despite that concentration, experts say the exchange increased competition in individual markets around the state.
Anthem Blue Cross of California was the most popular plan, receiving 30% of enrollments. Blue Shield of California was close behind, attracting 27% of the Covered California exchange's customers. Health Net and Kaiser Permanente also secured significant shares of the market, at 19% and 17% respectively, Covered California announced recently.
None of the seven other plans competing for exchange customers attracted more than 3% of Californians who selected a plan by April 15.
But insurance experts cautioned that such a consumer concentration should not be viewed as a lack of competition in the fledgling market. Many of the exchange plans with fewer enrollees were new entrants that only competed for customers in certain parts of the state, they pointed out. For example, the Chinese Community Health Plan attracted more than 13,000 customers, selling plans exclusively in the San Francisco market.
The exchange “gave the opportunity for these smaller, local nonprofit plans to jump into the market and see what they could do,” said Dylan Roby, director of health economics and evaluation research at the UCLA Center for Health Policy Research. “In the past, the individual market was really run by Anthem and Kaiser.”
Glenn Melnick, a healthcare finance expert at the University of Southern California, agreed that the exchange created more competition in the individual and small-group market than previously existed. But he cautioned that there is not yet enough information available to pass judgment on the sustainability of California's marketplace.
“The big question is, what are the premiums going to be going forward?” Melnick said. “What we don't know is whether the premiums they're charging are enough, and what their losses will be, and how much of those losses will be made up through the risk-coverage mechanisms built into the law.”
According to Peter Lee, Covered California's executive director, all 11 plans have indicated that they intend to sell products through the exchange again during the 2015 open-enrollment period. In addition, three other insurers have expressed interest in participating in the government-run marketplace.
Nearly 90% of the individuals who signed up for plans through Covered California were eligible for subsidies. Individuals making up to 400% of the federal poverty level of $23,850 for a family of four were eligible for subsidies.
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