Five Critical
Criteria used to
compare California
carriers.
1. Health Plan pricing
in the market.
Ultimately,
benefits need to be
priced well relative
to other similar
plans on the
market. Also, the
plans have to make
sense financially in
today's world of
ever-increasing
medical cost. Some large
multi-line carriers
like Principle offer
extremely rich
benefits that have
completely priced
themselves out of
the market. There's
a "sweet spot" where
plan design meets
the consumer's
budget and that has
to be a given when
choosing a plan.
Interestingly
enough, this pricing
value is driven by a
carriers ability to
do well in the
following other
areas so let's take
a look at them.
More information on
the
major carriers in
the California
market.
2. Extensive
provider network for
HMO and PPO. A
carrier needs to
have as many doctors
and hospital in all
major areas
participate in their
HMO and
PPO
networks. The more
the better. This is
especially true for
PPO plans which is
the direction the
market is ultimately
heading as costs
escalate. This is
primarily a function
of how many
subscribers the
carrier can bring to
the bargaining table
with medical and
hospital groups. If
a carrier covers a
significant number
of people in a given
area, the doctors
and hospitals of
that area need to
contract with the
carrier. Also, the
carrier can
negotiate rates
better which is
essentially the
foundation for PPO
plans. PPO's are
big group discounts
essentially. Here,
bigger is better.
You can find more
information on how
the
California health
networks work.
3. Flexibility and
Scope of plan
design.
The carrier must
also offer a full
range of plan
options: both rich
and value HMO
options; a full
range of PPO plans
from rich copay
plans to hybrid
lower priced plans;
Health Savings
Account or HSA
compatible plans and
strictly
catastrophic
lower-priced plans.
No one's needs are
the same. The
carrier should be
able to provide for
both sides of the
spectrum. A
key direction in the
market today is
towards the
segmentation of
maternity and
non-maternity
benefit plans on the
Individual/Family
market. This
is a critical
consideration or any
enrollee who may
need maternity
coverage in the
future. Health
Net currently only
has one plan with
maternity benefits
in their PPO
portfolio. On
the group side, it
has been more a move
towards higher
deductibles and in
some instances,
generic drug
coverage only.
The Generic only
benefit is more and
more prevalent on
the
Individual/Family
side. We feel
strongly at
CalHealth.net that
Brand name
prescription is
important as more
exotic medical
conditions can
require new drugs
that run 10's of
thousands of
dollars.
4. Ease of Use.
One more time...
EASE OF USE.
The carrier has to
be easy to deal
with. This is
critical for the
day-to-day
management of your
policy (which we
help with) and more
importantly, the
claims-processing
side. Technology is
increasingly
figuring here.
Which carriers have
made the investment
in the Information
systems to
facilitate both the
membership and
claims side. We
deal with all the
carriers day-in and
day-out...common
sense and
practicality are
essential in the
carrier you choose.
5. Pricing
Stability.
Over the past
decade,
California
health insurance
costs have increased
significantly.
Barring major
changes, it will
likely continue as
Americans use more
and more health
care. The ability
to mitigate this
increase is
primarily a function
of a carrier's
management of the
above four items.
Are they designing
and pricing
correctly for the
market to encourage
future rate
stability? Can they
negotiate well with
the medical groups
and large hospital
chains in the
California health
market? Do they
offer options for
carriers to reduce
benefits (and cost)
and still feel well
protected? Have
they invested in
making their
business effective
from and IT
perspective?
These are all
important questions
that directly your
future rates and
results as a
function of the
health carrier's
management.
California health
insurance Carrier by
Carrier listing in
descending order
Anthem Blue Cross
Blue Cross is
owned by Wellpoint,
which is probably
the dominant carrier
nationwide in terms
of stability and
progressive plan
design. They are
known as Anthem Blue
Cross Blue Shield or
Unicare in most
other States. They
have been the ones
to beat in the
California health
market.
1. Plan Pricing
- they are
consistently priced
in the top 1-2 for
comparable plans.
2. Network -
For PPO plans, they
probably the most
extensive network
with providers in
all counties. Over
70K providers and
400 hospitals
State-wide plus
access to the
Blue
Card network for
family members or
employees in other
States.
3. Flexibility
- On the Small Group
side, they started
the Employee Elect
program which is
still the most
flexible and easiest
to use. They even
apply choice to the
dental plans as
well. They have 4
HMO plans, 5 HSA
plans, and 12 PPO
plans plus a suite
called BeneFit for
low cost plans.
On the individual
side, they
consistently bring
out new plans from
the Right Plan 40
no-deductible PPO
plan to the new
Tonik
health plan suite that the
other carriers
invariably try to
copy 6-12 months
later.
4. Ease
of Use - They
are easiest carrier
to do business
with. They tend to
be the most flexible
when dealing with
issues and the
issues tend to be
less frequent than
with other
carriers. They are
ahead of the curve
(and have been) with
technology both in
terms of their
internal processes
and interaction with
groups. New online
control panels allow
employee additions,
terminations,
changes and more on
the Group side.
They can be strict
in
underwriting
(company
requirements) and
benefit management
is definitely there
but both of these
attributes work
ultimately to keep
cost down which is
the biggest issue
(hence #1) in the
market now.
They the first to
unveil an online
application and
online account
management and
visibility. Tonik enrollment is
completely handled
online.
5. Pricing
Stability -
Their increases as a
percentage tend to
be in the lower
quadrant of the
market...primarily
due to their work on
the above four
items.
Blue Shield of
California
Blue Shield of
California a strong
carrier in
California and also
participates in the
Blue Card network
for out-of-State
employees and family
members. It is one
of the few
non-profits. Cross
and Shield are two
separate, completely
independent carriers
at the
Small Group
(2-50 employees) and
Individual/Family
level. If PPO is
your preferred
option, they are a
good comparison for
Cross and Health
Net.
1. Plan Pricing
- they are
consistently priced
in the top 1-3 for
comparable plans.
2. Network -
For PPO plans, they
probably rival Blue
Cross with providers
in all counties.
They probably do not
negotiate as well as
Blue Cross but may
have a better
reception from
doctors/hospitals
because of it. This
also affects their
pricing going
forward. They do
allow access to the
Blue Card network
for employees or
dependents in other
States. Their HMO
is comparable to
Cross but neither is
thought to be the
strongest carrier
for HMO plans.
3. Flexibility
- They allow
selections from the
different classes of
plans (HMO, PPO, and
HSA). They have a
full range of plans
with one of the last
no-deductible PPO
Small Group plans on
the market. They
have 7 HMO plans, 4
HSA plans, and 13
PPO plans on the
Small Group side and
an equivalent suite
of plans on the
individual side.
4. Ease
of Use - Their
Group underwriting
is slightly more
flexible than Cross
but their claims and
membership side is
not as
advanced...especially
in terms of
technology. Our
sources say that
they are undertaking
a pretty significant
IT project to
integrate their
systems and have
been working to
bring Small Group
resources to the web
(behind Cross).
On the individual
side, they have an
online application
and online tracking
but their
underwiting tends to
be more involved.
5. Pricing
Stability -
Their increases as a
percentage tend to
be in the lower to
mid quadrant of the
market depending on
the class of plan (HSA
versus PPO for
example). They will
need to continue
modernizing in order
to keep this trend
going forward.
Health Net of
California
Health Net of
California was
originally Blue
Cross' HMO many
years ago.
Traditionally, they
were a strong HMO
carrier but they
have aggressively
moved into the PPO
market as the future
of HMO's and its
cost structure
dimmed. They tend
to copy Cross' moves
in the market so at
least they are smart
enough to the follow
the leader. If a
company's main focus
is HMO and they do
not have employees
out of State, Health
Net is definitely to
be considered.
On the
individual/family
side, they are a
solid carrier but
need more of a PPO
track record.
1. Plan
Pricing - Health
Net tends to copy
Cross' offerings and
then under-price the
market. In the
short-term, this is
fine for your
company. Long term,
the rates always
increase and/or
change. The only
issue is if the
increase occurs
mid-year and
employees have
already met
deductibles/max-out-of-pockets...making
a carrier change
difficult. This is
true on the
Individual/Family
side and Small
Group.
2. Network
- Health Net has a
strong HMO network
as that has been
their bread and
butter long before
the PPO came along
for them. The PPO
network should be
well represented
throughout the State
although it's range
probably does not
match Cross or
Shields, whose
experience in the
PPO market goes back
decades.
3. Flexibility
- Health Net copied
Cross beneficially
in that they copied
the nature of
Employee Elect where
you can offer
multiple plans to
their employees.
They have a full
range of plans with
16 HMO's, 4 HSA's,
and 8 PPO's. You
can see their HMO
background from the
plan options.
On the individual
side, they only have
one maternity PPO
plan but offer a
wider range of HMO
plans. Their
HSA's are comparable
but probably
under-priced.
4.
Ease
of Use - Health
Net tends to be
pretty reasonable
both in terms of
enrollment
(underwriting) and
membership. They
are behind Cross and
Shield in terms of
online capabilities
and systems.
On the individual
side, they tend to
be more strict with
underwriting and if
an applicant's
health is not clean,
they have declined a
high percentage of
apps. Cross
and Shield appear to
be more pragmatic in
terms of actually
looking at a
person's health
history and making a
decision.
5. Pricing
Stability -
Pricing stability
has been a weaker
area for Health Net
especially on the
PPO front. For HMO,
they have a good
grasp of the market
and the model. PPO
has been a bit more
elusive with more
requent and
significant changes
with their plans.
This is to be
expected as PPO
requires a good 5-7
years of claims
experience to truly
wrap your head
around the model
actuarially
speaking.
Kaiser of
California (Small
Group Comparison only. Kaiser
does not deal with
brokers for
Individual coverage)
Kaiser of
California is a very
large carrier in
California and it is
structured quite
differently than the
other carriers.
Kaiser does not
contract with
independent medical
groups and hospitals
but actually owns
its own hospital and
employs its own
doctors. Kaiser is
by definition an HMO
in that you must
remain in their
network to be
covered. They have
recently offered a
PPO plan but their
strong suit is HMO.
1. Plan
Pricing - Kaiser
is hard to beat for
HMO pricing.
Rarely, will the
other carriers offer
better priced
benefits. Their
lone PPO plan is
very expensive and
the network is
insufficient so
Kaiser works if all
employees will be
within their
network.
2. Network
- Again, for HMO,
they have many
facilities (although
not in all areas)
but tend to work
best in more
populated areas
around cities and
larger
metropolitans. You
are unlikely to find
a facility in more
rural areas and out
of State can be
difficult. Keep in
mind that if your
employees are
currently not in
Kaiser, they will
not be able to keep
their current
doctors. You're
either part of
Kaiser or not. Some
people love Kaiser
while other do not
(to put it mildly).
3. Flexibility
- They have just
unveiled an option
called Kaiser Choice
to offer multiple
plans to each
employee. Again,
the issue is with
PPO.
4. Ease
of Use - This is
the source for the
love and dislike
mentioned above.
Some people love the
"process" of
Kaiser. The
facilities tend to
be large,
all-inclusive
medical campuses.
They resemble a very
sophisticated
clinic. You may not
see the same doctor
each time. Others
do not like that you
are limited to
Kaiser's resources
(although they can
be extensive).
Kaiser tends to work
very well for 90% of
medical needs
(especially
maternity and day to
day needs) but
really suffers when
have more exotic
problems. If there
is a specialist for
your particular
ailment at Cedar
Sinai or UCSF, you
may not be able to
see them. Their IT
is pretty
sophisticated as
they have move to
make all information
accessible
electronically.
Ultimately, since
the provider is
in-house, many
issues with claims
are there but on
other side, there
can be some concern
with the "Insurance
Company" determining
what is medically
necessary.
5. Pricing
Stability -
Pricing has always
been advantage with
Kaiser and if
pricing is your only
concern and HMO is
fine...Kaiser will
be hard to beat.
We have listed Anthem Blue Cross,
Blue Shield of
California, Health
Net of California,
and Kaiser
separately as they
really are the
strongest
California
health insurance
carriers. There are
many other options
on the market, but
from our experience,
they usually are
not advisable against
one of the above
mentioned four.
Pacificare is
a strong carrier but
they were recently
purchased by
United. Until this
transition runs its
course, we are
hesitant to
recommend them.
They are
traditionally a
strong HMO carrier
with only recent PPO
plan options. Their
pricing tends to be
expensive for PPO's
and comparable to
Health Net. On
the individual side,
their PPO plans are
administered by AMS,
a completely
different company.
We do not feel quite
confident yet with
this arrangement.
The other major
carriers are
primarily Group
health companies and
we would not
recommend them for
Individual/Family
coverage.
Aetna tends to
be too expensive and
its networks are not
as good as the above
carriers. They went
the other direction
when other carrier
decided to compete
regionally and tried
to offer a truly
nationalized plan.
The problem is that
they are not as
competitive in terms
of network, plan
offering, ease of
use, and ultimately
because of
this...not as price
competitive.
Cigna also falls
in this category of
"Nationwide plan
that's not at
competitive in any
one region".
United, although
a very well run
nationwide company
(comparable to
Wellpoint), also
offers a separate
suite of group plans
in addition to its
recent Pacificare
acquisition. Again,
until the dust
settles on that
acquisition and
their networks and
pricing both
stabilize, we would
recommend one of the
top four carriers.
CalChoice,
which offers plans
from many different
carriers under one
umbrella will likely
follow
PacAdvantage
which completely
pulled out of the
market with 10's of
thousands of
customers. The
model is flawed in
that employee with
health issues will
cherry pick the
richer plans thus
ultimately causing
the plan to likely
fail.
We hope this
California health
carrier comparison
helps you. Please
let us know we can
help with any
questions.
