Today, May 23, 2013, the California Health Benefit Exchange, Covered California, released the 2014 individual health plan rates for 25 and 40 year olds. As they said in their press release, “it is impossible to make a direct comparison of these rates to existing premiums in the commercial market.” Still, at first glance the rates don’t look too high – but there is much information that is not included.
Covered California showed the rates for bronze, silver, gold and platinum level plans for a 40 year old in each of 19 rating areas. Los Angeles County has two rating areas while the 17 northern most counties in California are lumped into one region… not many people live there.
While the rates for the various metal plans look low, we really don’t know what is included. We know a few things about the plans and rates, but we don’t know the provider networks. Trying to determine whether these rates are low or high is like trying to tell the value of a car when you can only see the tires – you don’t know if you are looking at a Ferrari or a Yugo.
Rates for a few plans for a few ages: For example, Covered California only released the rates for 25 year olds on a catastrophic plan and a bronze (lowest benefit level) plan. They did not show the rates for a 25 year old in silver, gold or platinum level plans. Also, unlike the current rating system where health insurance has “rate bands” that offer one rate for a person in each category age 18-29, 30-39, 40-49, 50-54, 55-59 and 60-64; in 2014 the price of health insurance will change on every birthday. So, the rate for someone age 26 will be more than a person age 25. By only releasing the rates for a person age 25 and age 40 we can’t compare the rates very well to current rates.
No Network Information: Also, HBEX did not release information on the provider networks for each plan. Let me give you an example of the impact of the network on price. The Anthem Blue Cross Small Group HMO $25 copay, 100% Hospital plan is one of the best, most comprehensive, small group plans that Anthem Blue Cross offers in California. (Comparing the Covered California individual rates to small group rates is appropriate because the benefits are similar and both are guarantee issue (i.e., insurance companies must accept everyone.))
In Los Angeles County, that plan with a 1.0 RAF costs $535/month for a 40 year old person on the west side of L.A., when using the full HMO network – a network that includes Cedars-Sinai Hospital, UCLA and St. Johns Hospitals in Santa Monica. The exact same plan that uses the “Select” network costs $475/month. The Select network has fewer doctors and hospitals than the full network.
The exact same benefits using the “Priority Select HMO” network (a smaller network than the “Select” network) costs only $411/month for a 40 year old on the West Side of Los Angeles. All plans have the identical benefits; but the one with the smallest network costs 30% less than the plan with the full network ($535-$411=$112, $112/$411=30%).
We don’t know the exact benefits of a “Platinum” plan but we know that the out of pocket maximum is $4,000 individual, $8,000 family according to page 5 of the booklet. The Anthem Blue Cross $40 Saver HMO has a $4,000/$8,000 Out of Pocket max. The 1.0 RAF rates for a 40 year old on the west side of Los Angeles varies from $376/month (full network); $326/month (Select Network); to $279 (Priority Select Network.)
Covered California showed an unsubsidized platinum Anthem Blue Cross HMO plan costing $368 and $374 in north and south L.A.County (regions 15 & 16.) We don’t know which Anthem Blue Cross network this plan will use; so we have no way of knowing whether this is a high or low rate.
Low Rates Compared to Current Individual HMO Rates: Comparing it to the smallest network $40 Saver HMO plan the rate seems high, but comparing it to an individual HMO plan, the rate is low. Individual HMO plans are currently VERY expensive and the Covered California HMO rates compared to individual rates are low. The current rate for a 40 year old on the west side of Los Angles for an individual HMO ranges from $713-$995/month for the Anthem Blue Cross Select HMO and HMO respectively. Individual PPO rates vary widely. Again, we can’t compare Covered California’s rates with current rates until we know the full benefit and provider details of the proposed plans.
Limited Carriers: One thing that struck me was how few insurance companies (called “carriers” by industry insiders) are in the exchange. HBEX had announced that 33 carriers had submitted letters of interest yet only 13 carriers are included in the exchange throughout the state. Many of these will only participate in a few counties. Six carriers will offer coverage in the exchange in Los AngelesCounty. Only four of these currently offer individual coverage to consumers: Anthem Blue Cross, Health Net, Blue Shield of California and Kaiser. The other two are L.A. Care, the largest Medi-Cal insurance plan in California; and Molina Health Care, a large medical group with a license to offer insurance coverage.
Interestingly, CIGNA, which currently offers a very competitive individual plan in California, is not included in Covered California.
Limited Plan Types: One interesting aspect of the plans included in the exchange is that only Blue Shield (and Molina) will offer a PPO plan. Anthem Blue Cross will offer an EPO (Exclusive Provider Organization) which does not allow “out-of-network” visits. Health Net will only offer an HMO plan and Anthem Blue Cross will also offer an HMO along with L.A. Care and Kaiser Permanente.
Meeting Their Time Line: Hat’s off to Covered California. They have done an enormous amount of work in a very, very limited amount of time. So, they didn’t give us a lot of info today and we can’t tell whether the rates are high or low. We do know that the exchange should be able to start offering quotes by July 2013, as planned. I am amazed that they have accomplished so much in so little time. Health Care Reform is super political. They are working in a fish bowl of scrutiny. People on the Left want them to do more – people on the Right want them to do less. Agents just want information so that we can inform our clients. Covered California is trying to walk a very narrow tight rope. I am impressed. I think that they are doing a very good job.