California's newly created health exchange announced the bottom line on its insurance policies and rates Thursday, bringing sharper focus to family impacts of next year's health care overhaul.
Thirteen companies were selected to sell policies for the individual market through Covered California, a state-owned marketplace for comparing prices of coverage with identical benefits but different networks of doctors.
"We've hit a home run for consumers because we have affordable rates, we have better coverage and real choice for consumers across the entire state," said Peter V. Lee, director of Covered California.
Anthem Blue Cross, Blue Shield of California, and Kaiser Permanente, three of the state's largest insurers, were among firms chosen by Covered California to sell policies this fall, subject to rate review by state regulators.
Others chosen to compete in all or parts of California were Health Net, Western Health Advantage, Molina Healthcare, Alameda Alliance for Health, Contra Costa Health Services, and the Sharp, Valley, L.A. Care, Chinese Community, and Ventura County health care plans.
Three major insurers – Aetna, Cigna and United Healthcare – opted not to sell policies on the exchange's individual market, sparking concern that lack of competition could lead to a handful of massive firms driving up prices in the future.
"Look, everyone can cheer that we finally have a place where people can buy policies if they have pre-existing conditions," said Jamie Court, president of Consumer Watchdog and leader of an effort to allow state regulation of health insurance rates.
"The question is how much people are going to pay and whether it's reasonable," Court said. "Covered California cannot answer that question when it's left out of a lot of the market and there's no regulator able to (reject) rates."
Under next year's federal mandate, nearly all Americans will be required to have health insurance next year or pay a penalty of $95 or 1 percent of their income, whichever is more.
Sally Pipes, president of the Pacific Research Institute, said consumers were promised that a health care overhaul would create plenty of choice – and having three major insurers sit on the sidelines lessens options, she said.
"It's unfortunate," she said. "I wanted all insurers to be available."
But Betsy Imholz, of Consumers Union, applauded selection of the exchange's 13 firms as "a very significant step toward fixing" a dysfunctional health insurance market currently marked by "exclusions that run rampant, gimmicks and gotchas."
"It's an impressive first step that will provide fair, comprehensive and affordable coverage," Imholz said of the new system, which will let consumers compare prices of plans offering identical benefits.
Premiums will vary based on age, region, household size and type of coverage sought.
In the four-county Sacramento region, for example, premiums for basic coverage – a silver plan – would cost as little as $56 per month for someone with annual income of $17,235. That same policy would soar to $332 per month for an individual earning $45,960 per year. Federal subsidies would bridge the gap.
An estimated 2.6 million Californians will be eligible for federal subsidies if they buy policies through the exchange. Aid will be offered on a sliding scale, extending to a family of four earning up to $94,200.
Five tiers of policies will be sold in the individual market by Covered California: bronze, silver, gold, platinum and catastrophic coverage. The lowest premiums are for policies with the highest out-of-pocket costs for care – and vice versa.
Monthly premiums will fall significantly next year for individuals of low or moderate income who qualify for subsidies. Rates are likely to rise for many higher-wage earners – though not by the average of 30 percent envisioned in March by the Milliman consulting firm, Lee said.
"Quite frankly, we've held insurers' feet to the fire," he said.
Lee said cost comparisons cannot easily be drawn, partly because the new policies cannot deny someone based on a pre-existing medical condition and the scope of coverage will differ from those now sold in the private market.
"What we see in the rates submitted to us, though, are rates going up far lower than the best estimate of what Milliman thought might happen – and way below the worst-case estimates of doom and gloom," Lee said.
State Insurance Commissioner Dave Jones, in a written statement, said "it is premature to hazard an opinion as to how these rates compare to rates in the individual market today or whether they are justifiable."
All policies sold on the exchange must cover preventive care, prescription drugs, contraception, medical screenings – such as mammograms – and other "essential benefits," including pediatric, mental health, maternity and rehabilitation services.
Premiums cannot vary by gender, and insurers are not allowed to set a maximum dollar amount they will pay during a policyholder's lifetime.
Paul Markovich, president of Blue Shield of California, said his firm's policies are expected to rise by an average of 13 percent next year, partly because of the mandatory increase in benefits.
"The volume and complexity of this implementation is daunting, and it will be imperfect – and we will make it work," Markovich said.
California's 19 geographic regions will average five health plans from which to choose. Even in most rural areas, consumers will have two or three options – though in a small number of counties only one plan will be available, officials said.
Contact Jim Sanders, Bee Capitol Bureau, (916) 326-5538 or