Summary of Covered California’s Report on 2018 Health Plans, Premiums and Coverage
Open Enrollment for Covered California starts 11/1/17 and ends 1/31/2018. https://www.coveredca.com/apply/ Despite Republican efforts to repeal and replace, they have not succeeded. Despite President Trump’s efforts to sabotage ObamaCare (the Affordable Care Act), California has developed workarounds to continue California’s remarkable progress in covered our state’s uninsured.
Uninsured rate: California’s uninsured rate has fallen from 17.2% to 7.1% -- one of the best performances in the nation. About 1.4 million Californians are enrolled in coverage through Covered California; 90% are getting help paying for their coverage About 600,000 are insured in the individual market outside Covered California.
Risk profile: California’s individual market and Covered California have achieved a far better risk mix than most of the other states – i.e. the mix of healthy and unhealthy lives signing up for coverage has been far better in California. As a result, individual premiums are about 20% less in the California market.
Plan participation: Eleven plans are participating in the California market. Some such as Blue Shield and Health Net are expanding their market presence and some such as Anthem Blue Cross are leaving many competitive markets. In most markets there are choices of three plans or more while in some, there are only two. In Los Angeles, there are 8-9 competing plans; whereas in the Northern rural regions, there are only two -- Blue Shield and Blue Cross. In Orange, eight plans compete, while in Fresno there are only two competitors Blue Shield and Kaiser. The lack of plan competition is often associated with the lack of provider competition – i.e. if there is only one hospital and one medical group, there is really no possible basis for a competitive market. The absence of plan and provider competition is often in turn tied to far higher premiums for subscribers.
In 2017, Kaiser was the choice of 26% of subscribers; Blue Shield was the choice of 25% of subscribers; Blue Cross was the choice of 19% of subscribers; Molina was selected by 12% of subscribers and Health Net was the choice of 11% of subscribers. The other 6 carriers were selected by 6% of subscribers. Half of Anthem Blue Cross’ subscribers will need to choose another plan for 2018 because Blue Cross is dropping out of many California counties where it has determined that it cannot be competitive and make a profit.
Premium increases: Premiums in 2018 are increasing on average by 12.5%: year 1 (2015) the increase was 4%; year 2 was 4%; year 3 was 13% and year 4 (2018, this year) it will be 12.5%. The four-year average increase was 8.5%. These are weighted averages; that means they are weighted by which plans consumers actually choose. So for example a plan that increased its premiums by 5%, but only 1% of consumers chose that plan would count for only 1% in the weighted average.
The lowest priced bronze plans increased by 4%, 3%, 4% and then 12% this year. The lowest priced silver increased by 5%, 2%, 8% and 9% this year. The savvy shopper plans (this assumes that the shopper chose the lowest priced plan in their preferred metal tier) decreased by 4.5% from 2014 to 2015, fell by another 1.2%, and increased by 3.3% this coming year. This assumes that subscribers change plans to the lowest priced plan in their preferred metal tier.
Recent studies by the Commonwealth Fund and by Covered California confirm that subscribers are in fact changing plans annually based on their list prices. 62% of new enrollees and 56% of new enrollees are picking the plans with the lowest and second lowest prices in their preferred metal tier.
Trump surcharge: The Affordable Care Act requires that copays and deductibles in the Exchanges (Covered California) be reduced for low and moderate-income subscribers (an individual with income up to $30,000 annually, a family of four with income up to $61,000 annually). Insurers are to be reimbursed for these costs. House Republicans sued the Obama Administration and a district court judge issued a preliminary ruling that this may well require Congressional appropriations. The case is on appeal, and the Trump Administration recently decided not to make any further payments. Although Republican Senator Lamar Alexander and Democratic Senator Patty Murray have worked out a compromise to pay the insurers, President Trump and many Congressional Republican leaders are as yet unwilling to fund or support the Alexander/Murray compromise; they still want full scale repeal.
The California solution: California has developed an interim solution – a 12.5% surcharge on the enhanced silver plans. All individuals with eligibility for premium assistance who choose the silver with the surcharge are protected from any adverse financial impacts by their eligibility for premium assistance. Individuals not eligible for premium assistance who want silver coverage are strongly encouraged and advised to buy silver plan coverage on the open market outside the Exchange where the 12.5% surcharges do not apply. Individuals eligible for premium assistance who purchase either the bronze or gold plans will also likely find that their premium assistance has increased.
How does this work? As you know, a silver plan pays 70% of your medical costs; gold pays 80%, and bronze only 60%. Assume that the 2nd lowest priced silver costs $100 a month, bronze costs $90 and gold costs $110. Your premium assistance is tied to the second lowest cost silver. The Trump surcharge in California increases the price of the silver to $112.50. The bronze plan now saves you $22.50 a month as opposed to $10. Gold tier coverage costs $2.50 less than the cost of silver with the Trump surcharge and provides more coverage (unless you qualify for a good cost sharing reduction).
The cost sharing reductions are available to an individual reporting between $16,000 and $30,000 in annual income, for a family of four between $34,000 and $62,000. For the lowest income individuals on this scale, the “enhanced silver” pays 94% of their medical costs, sliding down to 87%, then 73%, and finally 70% as it phases out.
To put it in concrete terms, the enhanced silver 94 would have a $5 copay on a primary care doctor visit; the enhanced silver 87 would have a $10 copay, and the enhanced silver 73 would have a $30 copay. The gold plan would have a $25 copay, and the bronze might have a $75 copay.
This requires a careful consideration of comparative costs, but as a general rule of thumb, if you are not eligible for premium assistance, do not buy the silver tier in Covered California. If you want silver, buy it directly from the plan outside the Exchange, it will cost you 12.5% less. On the other hand you can buy gold or bronze tier coverage either in the Exchange or outside the Exchange without the Trump surcharge. Likewise if you are eligible for premium assistance but not eligible for the cost sharing reductions, you are better off buying bronze or gold in the Exchange. If you are eligible for the Silver 94 or Silver 87, this is almost certainly your best choice, and you can only get these reductions inside the Exchange. You will be insulated from the Trump surcharge by your premium assistance and also get the reduced cost sharing.
Geographic variations:
California has 19 separate regions. Each had different plans and different premiums. The rates of premium increase have been very different among the plans in the different regions. Some increases are quite modest (media accounts to the contrary) while others are going through the roof. I omitted plans with 2% or less market share.
In general, premiums are far higher in Northern California than in Southern California; however this year the premiums increased faster in Southern California than in the Northern California regions. PPO premiums increased substantially faster than the HMO premiums. And some plans that came in with really low premiums last year and got healthy market share increased them very significantly this year. So wherever you are able, please make sure you shop around because last year’s bargains are not necessarily this year’s best buy. https://apply.coveredca.com/apspahbx/ahbxanonym.portal?_nfpb=true&_st=&_nfls=false&_pageLabel=previewPlanPage#
North Rural (e.g. Humboldt and Shasta)
Blue Cross: 77% market share; 20-54% premium increase
Blue Shield: 22% market share; 10-24% premium increase
Kaiser: 1% market share; 3-7% premium increase
North Bay (e.g. Solano and Sonoma)
Blue Cross: 8% market share; leaving market
Blue Shield: 16% market share; 14-28% premium increase
Kaiser: 60% market share; 3-7% premium increase
Western Health Advantage: 15% market share; 13-19% premium increase
Sacramento region (e.g. Sacramento and Yolo)
Blue Cross: 18% market share; leaving market
Blue Shield: 14% market share; 10-24% premium increase
Kaiser: 61% market share; 3-7% premium increase
Western Health Advantage: 6% market share; 11-19% premium increase
San Francisco
Blue Cross: 6.7% market share; leaving market
Blue Shield: 24% market share; 7-20% premium increase
Kaiser: 42% market share; 3-7% premium increase
Chinese Community Health Plan: 26% market share; 6-9% premium increase
Contra Costa
Blue Cross: 3% market share; leaving market
Blue Shield: 30% market share; 7-20% premium increase
Kaiser: 66% market share; 3-7% premium increase
Alameda
Blue Cross: 5% market share; leaving market
Blue Shield: 31% market share; 12-26% premium increase
Kaiser: 63% market share; 3-7% premium increase
Santa Clara
Blue Cross: 33% market share; 6-37% premium increase
Blue Shield: 10% market share; 7-21% premium increase
Kaiser: 44% market share; 3-7% premium increase
Valley Health Plan: 10% market share; -3 to 10% premium increase
San Mateo
Blue Cross: 11% market share; leaving market
Blue Shield: 15% market share; 2-15% premium increase
Kaiser: 64% market share; 3-7% premium increase
Chinese Community Health Plan: 10% market share; 5-7% premium increase
Health Net: 2% market share; 14% premium increase
Monterey (e.g. Santa Cruz and Monterey)
Blue Cross: 39% market share; leaving market
Blue Shield HMO: 8% market share; 8-24% premium increase
Blue Shield PPO: 34% market share; 10-23% premium increase
Kaiser: 17% market share; 3-7% premium increase
Health Net: 2% market share; -10% premium increase
San Joaquin region (e.g. San Joaquin and Tulare)
Blue Cross: 67% market share; 15-48% premium increase
Blue Shield PPO: 5% market share; 9-22% premium increase
Kaiser: 27% market share; 3-7% premium increase
Fresno region
Blue Cross: 28% market share; leaving market
Blue Shield PPO: 42% market share; 0-13% premium increase
Kaiser: 29% market share; 3-7% premium increase
Central Coast region (e.g. Ventura and Santa Barbara)
Blue Cross: 37% market share; leaving market
Blue Shield PPO: 46% market share; 5-18% premium increase
Blue Shield HMO: 3% market share; 4-20% premium increase
Kaiser: 14% market share; 3-7% premium increase
Eastern Sierra region (e.g. Mono to Imperial)
Blue Cross: 22% market share; leaving market
Blue Shield PPO: 9% market share; 4-17% premium increase
Kaiser: 14% market share; 3-7% premium increase
Molina: 69% market share; 16-29% premium increase
Kern
Blue Cross: 29% market share; leaving market
Blue Shield PPO: 39% market share; 1-13% premium increase
Kaiser: 19% market share; 6-10% premium increase
Health Net: 14% market share; 8-13% premium increase
Los Angeles (Northeast)
Blue Cross: 7% market share; leaving market
Blue Shield PPO: 36% market share; 7-20% premium increase
Kaiser: 15% market share; 6-10% premium increase
Health Net: 20% market share; 7-19% premium increase
LA Care: 7% market share; 8-10% premium increase
Molina: 15% market share; 36-51% premium increase
Los Angeles (Southwest)
Blue Cross: 13% market share; leaving market
Blue Shield PPO: 19% market share; 13-28% premium increase
Kaiser: 20% market share; 6-10% premium increase
Health Net: 15% market share; 6-17% premium increase
LA Care: 6% market share; 11-13% premium increase
Molina: 24% market share; 27-42% premium increase
Oscar: 2% market share; -13 to 24% premium increase
Inland Empire (Riverside and San Bernardino)
Blue Cross: 5% market share; leaving market
Blue Shield PPO: 23% market share; 8-21% premium increase
Kaiser: 20% market share; 6-10% premium increase
Health Net: 23% market share; 8-20% premium increase
Molina: 28% market share; 27-42% premium increase
Orange
Blue Cross: 15% market share; leaving market
Blue Shield PPO: 33% market share; 6-20% premium increase
Kaiser: 15% market share; 6-10% premium increase
Health Net: 22% market share; 8-22% premium increase
Molina: 12% market share; 20-34% premium increase
San Diego
Blue Cross: 4% market share; leaving market
Blue Shield PPO: 17% market share; 7-20% premium increase
Kaiser: 23% market share; 6-10% premium increase
Health Net: 17% market share; 8-13% premium increase
Molina: 19% market share; 18-23% premium increase
Sharp: 21% market share; 6-17% premium increase
Reference: Covered California’s Health Insurance Companies and Plan Rates for 2018 (August 2018)
Prepared by: Lucien Wulsin
Dated: 10/27/17