Exchanges are adding new carriers in many parts of the US, but not in California
Insurance exchanges in some states are adding new carriers that will be supplying coverage to consumers beginning in November of this year. This coverage will go into effect on January 1, 2015. California is one of the only states whose exchange did not welcome a new carrier this year. Covered California, as the state’s exchange is called, is experiencing a somewhat unique problem in the availability of health insurance coverage. The state’s exchange is becoming smaller.
Health insurance companies are being pushed out of the state’s exchange
Covered California had 13 insurance carriers when it was launched last year. The number of insurance companies participating in the exchange competed with one another, leading to lower rates for policies being offered to consumers. Many large insurers involved themselves in the exchange, but small providers also flocked to the marketplace in order to gain access to a swelling tide of new consumers. Over the past several months, many of these smaller providers have been pushed out of the exchange due to state rules and their inability to compete with options in the exchange itself.
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Large insurers tend to hold dominance over certain regions of the state
The state’s four largest insurance companies account for 95% of those that have enrolled into the exchange for coverage. There are 10 health plans being offered by these companies, which would seem like a fairly generous offering when compared to what is available through the exchanges in other states. The problem, however, is that California is large and some regions are covered by a single insurance company. For people living in such regions, health insurance options are extremely limited and whatever insurer has dominance over that region also has the ability to charge what they want for coverage.
Victory of the insurance exchange is being called into question
While the state’s insurance exchange has successfully given consumers access to more options when it comes to coverage, it may be falling short of ensuring that these options remain available. Increasing competition within the insurance industry was one of the goals of the exchange, and while this did occur, market concentration may be souring the victory that the exchange has managed to achieve.