Covered California’s Public Flavor

Although the public option for healthcare coverage died in Congress before the Affordable Care Act was signed into law three years ago, it appears to have been partially resurrected via Covered California's healthcare exchange.

Of the 13 plans Covered California officials said last week would offer benefits to individual and family applicants, six operate for the most part in the public realm. Four specialize in Medi-Cal managed care – L.A. Care Health Plan, Molina Health Care, Alameda Alliance for Health and Contra Costa Health Care.  Ventura County Health Care Plan and Valley Health Plan in Santa Clara County offer benefits to government employees in their respective counties.

The offerings of those plans may be unfamiliar to a large swath of the 3.5 million Californians who may eventually purchase insurance through the exchange, as most will operate in a single county only. And while a large percentage of those purchasers are expected to receive tax subsidies to make their insurance more affordable, the $94,000 household income cutoff is comfortably middle class for many Californians, making them more familiar with the larger commercial carriers offering exchange coverage such as Kaiser Permanente and Anthem Blue Cross.

But plan officials and healthcare advocates suggest that the Medi-Cal and county plans will command a strong following among lower-income Californians who will purchase benefits through the exchange. Many, they say, had coverage through Medi-Cal in the past, but lost it when their incomes went above the eligibility cutoff, which for the state's most populous counties is 138% of the federal poverty level.

“From (the plan) point of view, many of those families are their former patients,” said Anthony Wright, executive director of Health Access, a Sacramento-based advocacy organization and a member of the Payers & Providers editorial board. “Now that they can get insurance, they may want to continue with same doctors and providers they had in the past.”

Officials with the health plans agree with Wright's rationale.

“We don't think of this as going after a commercial stream of business,” said Howard Kahn, L.A. Care's chief executive officer. “This is a natural extension of Medi-Cal for those who may have had coverage in the past.”

Molina, a Long Beach for-profit that focuses on Medi-Cal and Medicaid populations, also wants to serve prior Medi-Cal populations.

“We are entering the (exchange) to continue serving the low-income Medicaid expansion population and to enable parents of our (Healthy Family) members to choose the same health plan as the one their children,” said Kathleen O'Guin a Molina spokesperson. Kahn also noted that L.A. Care wants to capture the parents of enrollees in its Healthy Families plan.

L.A. Care is also fortifying its provider network, according to Kahn. This may help attract would-be enrollees with higher incomes who might shop by price, as L.A. Care's premiums are among the lowest in the region where it offers coverage. 

“Our provider network is pretty excited by this new population,” Kahn said. He added that since primary care rates have been increased as part of the ACA, it has been easier to attract new physicians to its network.

Molina also plans to enter the exchanges in the eight other states where it has Medicaid business, according to O'Guin.

Nevertheless, the move to control costs has been an overriding concern among the plans participating in Covered California, whether they focus on commercial or Medicaid populations. They offered competitive premiums in the 19 geographic zones offered by the exchange, with many individual plans around $200 a month for individual coverage for a 40-year-old enrollees. Family premiums will be released at a later date.

But as a result of keeping prices down, many of the insurers excluded prestigious and pricier hospitals. Cedars-Sinai Medical Center, one of California's most prestigious – and expensive – hospitals, is in none of the 52 different plans offered by the exchange's insurers.

And while there are options to purchase  policies with rich benefits and low out-of-pocket costs, Wright noted that Covered California could be seen as much as a victory for the state’s safety net providers as it is for the state’s middle class residents.

“Covered California provides a level playing field, so these plans can offer a competive choice – and they will have an important role,” he said.