Covered California Could Have Increased Insurers, Consumer Choice, Insurance Commissioner Says

California’s insurance commissioner says he objects ‘in the strongest possible terms’ to a decision by Covered California to block an insurer from selling policies in areas with few consumer choices.

Commissioner Dave Jones says Health Net wanted to sell individual policies in more than two-dozen new counties in California in both 2014 and 2015, but the effort was rejected by the health insurance exchange both times. 

"I don’t understand it, I don’t think it was something that should have been done," says Jones.

In a letter to Covered California's Executive Director, Peter V. Lee dated August 25th, 2014, Commissioner Jones requested that Covered California "immediately reverse" its decision not to allow the health insurer to sell individual policies in Northern California, the Greater Sacramento region, Alameda County, Fresno and nearby counties, and the San Luis Obisbo region.  

The letter says the health insurance exchange's decision "needlessly" reduces competition, which benefits large insurers such as Anthem Blue Cross, Blue Shield of California and Kaiser Permanente.

“It shouldn’t be about trying to protect those who are already selling, it should be about trying make sure the market is open to new entrants or those who want to expand, so that consumers have more choices,” he said.

Nearly 30,000 Covered California subscribers live in zip codes where there is only one insurer.

About half of those people are in rural, Northern California, where Anthem Blue Cross has over 90 percent of the market share.  

Jones says the exchange also missed the opportunity to include Moda Health in the marketplace this year, which would have further increased the options for people in the northern area of the state (see Capital Public Radio's earlier coverage of Moda Health).

Jones says more insurance competition could mean lower premiums for consumers. He says having more insurers could also provide exchange enrollees more choice of medical providers.

Health Net said after it submitted it's intent to sell policies in 2015, it engaged in conversations with Covered California.

"We understood from those discussions that Covered California wanted to keep its original agreements," says Brad Kieffer, spokesperson for Health Net.

Health Net is already selling in parts of California through the exchange. But Kieffer said his company understood that Covered California was trying "to offer as much consistency as possible for consumers renewing for the first time in 2015."

Health Net says it's "keeping options open"  in terms of expanding service areas in 2016.

Covered California says it does not comment on negotiations with insurers.

The exchange's Board of Directors is meeting today and will discuss a policy for accepting new insurers in the marketplace for 2016.  

UPDATE as of 5pm:

The Covered California board of directors has adopted a new policy that will allow more health insurance carriers to sell in areas of the state where there are few options now. 

The exchange had a rule not to allow new insurers into the market until 2017, with a couple of exceptions.

The new policy will allow health insurance companies that are already established in the state to apply to sell individual coverage in underserved areas.

Those areas include Northern California, the Central Coast, the Central Valley and Mono and Inyo counties.

Nearly 30,000 Covered California subscribers in more than 22 counties have only one insurer option in the exchange.