Competition forces Blue Shield of California to lower rates.
In a market that most people won’t ever see, Blue Shield of California announced they were lowering their health insurance premiums for California Public Employee Retirement System (CalPERS) HMO plans. This bucks the trend of the other carriers raising rates by as much as 9%.
Blue Shield responds to competition
While it would be nice to think that the reduction in monthly health insurance premiums was a result of lower health care costs, it is probably in response to increased competition. In June, CalPERS announced they were adding more health plans from different carriers to offer more choices for state employees.
“In 2014, members will be able to choose from multiple plans in most areas of the state. Anthem Blue Cross, Health Net, Sharp Health and United Healthcare join Blue Shield of California and Kaiser Permanente as HMO providers.”
In the same press release they announced a lower than expected increase in health insurance premiums.
“The California Public Employees’ Retirement System’s (CalPERS) Pension and Health Benefits Committee (PHBC) today recommended the Board of Administration approve a 2014 health care package that would raise overall premiums next year by an average of 3 percent for the Pension Fund’s nearly 1.3 million health program members, the lowest average increase since 1998. The rate is lower than the 9.6 percent increase in 2013. If the full Board approves the new premium rates, they will take effect January 1, 2014.”
Not all health insurance rates decreased
Not all the plans increased by the relatively low 3.8%. Kaiser went from an Employee Only rate of $609.34 in 2013 to $661.61 for 2014, an increase of 9%. A factor in moderating the overall average health insurance premium increases was Blue Shield of California lowering their Employee Only rate for their highest level health plan from $676.11 in 2013 to $655.02 for 2014, a 3% decrease.
| CalPERS 2013 Rates | Employee Only | Employee + 1 | Employee + 2 |
| Blue Shield | $676.11 | $1,352.22 | $1,757.89 |
| Blue Shield Advantage | $676.11 | $1,352.22 | $1,757.89 |
| Blue Shield NetValue | $577.52 | $1,155.04 | $1,501.55 |
| Blue Shield NetValue Advantage | $577.52 | $1,155.04 | $1,501.55 |
| CalPERS 2014 Rates | |||
| Blue Shield Access | $655.02 | $1,310.04 | $1,703.05 |
| Blue Shield Access + EPO | $655.02 | $1,310.04 | $1,703.05 |
| Blue Shield NetValue | $575.78 | $1,151.56 | $1,497.03 |
Blue Shield heralds their decrease to existing members
For 2014, we’ve lowered our health plan rates for both Access+ HMO® and NetValueSM HMO plans in most counties across the state. This means that NetValue will be the most affordable HMO plan for most state and public employees in 2014.
And with Blue Shield, members will enjoy great benefits like:
- the ability to self-refer to a specialist
- low$15 copays for office visits
- $15 copays for Teladoc consultations
- no deductible, no claim forms, and no paperwork
Do we need group health plans?
In an earlier post I questioned the need for group insurance with the advent of Obamacare’s guarantee issue individual health insurance under the ACA (Do We Need Group Health Insurance?). Generally, large groups like CalPERS have been able to negotiate health insurance rates and benefits that are far better than the average person could find on the open market. Blue Shield’s rate lowering is certainly a function of competition but also the drivers of most businesses: fear and greed. The fear of losing business and the greed to acquire more business. On the upside, CalPERS members in the Blue Shield plans will have a few extra dollars to spend at their local cafe this next year.
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