A glaring deficiency in the report is the failure to attribute any decline in enrollments, either on the federal level or at Covered California, to an improving economy. Unemployment is at record low percentages and more people are working for employers who offer group health plans. Covered California’s own small group plans have seen increased enrollment since its inception in 2014 and their budget report estimates continued enrollment growth.
The health plans and Covered California may give lip service to the value of the agent community, but it is not reflected in the compensation we receive. I’m not trying to get rich as an insurance agent. My net revenue listed on my Schedule C for 2016 was $34,000. If the new compensation schedules significantly erode my insurance revenue then I will have to find other income streams. Maybe Covered California will hire me to answer phone calls; I hear they have a great benefits package.
A review of health insurance rates in Northern and Southern California shows rates for young adults will increase between 30% to over 40%. Instead of the 6% to 16% increase in rates for adults only, families could experience a 20% increase in health insurance rates in 2018.
If you review the 2018 Covered California rate booklet, which doesn’t actually have any rates in it, you notice that many of the carriers are having modest rate increases. Most of the rate increases are around 10% or less. Some carriers such as Blue Shield, Health Net, and Oscar are dropping rates in some regions. What jumped out at me was Molina which was identified as having rate increases at a minimum of 16% and up to 51% in the regions they offer health plans.
Based on the data I’ve seen, the ratio of the actuarially fair cost differential of insuring someone in their 20s and someone in their late 50s or early 60s is roughly 5 to 1. Setting the ratio at 3 to 1 causes distortions that unfavorably impacts young adults and, as a result, degrades the risk pool. Insurance companies are reluctant to put themselves in a position in which they risk losing money with additional customers and will set prices for older adults so that they can recover their costs in that age group. The 3 to 1 ratio limits how much they can reduce premiums for young adults. The resulting premiums represent “unfair” insurance for young adults and discourages them from purchasing insurance. Discouraging young adults from purchasing insurance exacerbates the adverse selection problem in the insurance market and reduces the incentive for insurance companies to compete for older customers.
If you reside in any of the above counties you will be able to keep your EPO plan. If you reside in any other county, and you have an Anthem Blue Cross EPO or HMO plan, through Covered California or off-exchange, you will need to select a new insurance carrier for 2018. The exit of Blue Cross from the individual and family market does not affect employer group health insurance plans or their Medicare Advantage plans.
Both DMHC and CDI make their rate review process as transparent as possible to the public. This is not the case for Covered California. The reason Covered California gets to negotiate rates in secret is because the health plans are considered contractors and the rates are considered bids. I learned this after I filed a Public Records Act request asking for the rates submitted to Covered California.
The California individual and family plan market place will be changing quite a bit in 2017. Next to confirming if your favorite doctors are covered by the new health plans, many consumers want to make sure their chosen hospital is in-network as well. From information provided by Covered California and the health plans, I have put together a table of California hospitals by region and the health plans they accept.
A really nice tool for agents and consumers to compare health insurance plan rates is the Shop and Compare Tool. Within this website you can also download a proposal that lists the available health plans by metal tier level for the household information entered. Unfortunately, I recently found that the proposal created may not always match the website results shown.
Covered California has come under pointed criticism from the health insurance companies for their lack of verification of a consumer’s Qualifying Life Event (QLE) for a Special Enrollment Period (SEP). That will change as of August 1, 2016, when Covered California will start a program to randomly sample consumers who have enrolled in health plan outside of Open Enrollment under a QLE. Selected consumers will have to provide verification that they actually do have a QLE that makes them eligible to enroll outside of Open Enrollment such moving into California or the loss of minimum essential coverage like Medi-Cal or employer group coverage.