Californians can breathe a sigh of relief over a crucial first step in implementing health care reform. State officials last week unveiled the health plans and premium rates that will be available under the California health exchange. They show the market is working as intended actually better.
Thirty-three health plans including some from out of state competed to offer plans for the uninsured who don't get insurance through an employer, through Medicare (the federal insurance program for the elderly) or Medi-Cal (the federal-state partnership providing insurance for lower-income Americans). Thirteen plans were selected.
Residents in every region including rural areas will have a choice among at least three insurance companies. Some will have as many as six. Residents of the Sacramento, Placer, El Dorado, Yolo region will have a choice among four insurance companies Anthem, Blue Shield, Kaiser Permanente and Western Health Advantage. The exchange rejected bids that were too high, or didn't have a strong network of doctors and hospitals.
The competition has brought the rates lower than expected even for so-called "young invincibles." Some experts have worried that younger people would choose to pay the penalty ($95 or 1 percent of income in 2014, and increasing in later years) rather than buy insurance.
But with premium prices in line with what employers pay for insurance and federal subsidies for individuals making less than $46,000 a year and families earning below $94,000 not the excessive rates of the past individual market that should change.
It did with the Massachusetts exchange, which has been in place since 2007. Among young men, the rates of uninsured fell from 19 percent in 2006 to 9 percent in 2008. Among young women, from 7 percent to 3 percent.
Clearly, insurance plans in California want affordable prices for the under age 34 group, because they tend to be more healthy, offsetting the cost of older, sicker people.
In the exchange, people will be able to see a simple chart on how much each insurance company will charge among four options Platinum, with the most benefits and the highest prices, followed by Gold, Silver and Bronze. Those under the age of 30 also can buy a cheaper catastrophic policy at an average rate of $136 a month.
Some critics have noted that United Healthcare, Aetna and Cigna chose not to compete in the exchange. But there's a simple reason for that: They concentrate on employer coverage and don't have much of a presence in the individual market, totaling only 7 percent. They can enter in later years.
Others question whether winning companies lowballed rates that they will raise in the future. There's an obvious remedy to that: Work hard to recruit younger, healthier people to the exchange such as the more than 2.5 million uninsured adult students who attend community colleges.
Where the exchange should really have a positive impact is for those who are self-employed, who are early in their careers and move from job to job or who want to start a business but have been stuck in "job-lock" to retain health benefits.
The coverage seems well worth peace of mind and is the responsible thing to do instead of shifting costs to others. Now the big task is getting the word out to the uninsured before enrollment starts on Oct. 1.
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