Archive | Insurance Company News – California

Caution – Using Your Health Insurance May Be Injurious To Your Financial Health

It is becoming obvious to my clients that there are two major problems with health insurance in California, one is the monthly premium and the other is the actual financial risk of using their health insurance coverage.

What is this risk? It is the financial gap of combined deductibles of $7,000+ for individuals or $14,000+ for families before the insurance carrier pays for the remaining medical expenses.

The ACA plans with the largest number of enrollees are the Bronze and Silver plans. These plans are favored because they have lower monthly premiums than Gold and Platinum plans. However, Bronze and Silver plans also have the highest combined deductibles.

Other than buying a much more expensive Gold or Platinum plan the only real solution is Gap insurance coverage that will pay for or reimburse these high combined deductibles.

Gap coverage plans are designed to pay for or reimburse your medical expenses caused by accidents, critical illness, or hospital admissions for any reason up to the limits of the actual Gap policy or the maximum combined deductible of your ACA policy.

The cost of average hospital emergency room visit has increased to over $2,000 for simple in and out treatment. However, the greatest medical expenses are hospital stays for more than a day, which will trigger your maximum combined deductible nor matter the category of your ACA plan

Financially, you need to determine the potential financial liability of your health insurance for 2018. Simply add your total premium to be paid in 2018, with your combined deductible or maximum out of pocket expense for in-network medical expenses.

As an example, for 2018, a family of four (ages 42, 40, 14, 12) living in Los Angeles will pay approximately $13,800 for an Off-Exchange Bronze plan, or $17,400 for a Silver plan.


You can tailor Gap plans to your specific family situation:

A family with children might select an accident only policy that would pay or reimburse up to $7,500 for each member of the family if the medical expenses were caused by an accident.

A single individual or a couple without children might select an accident combined with critical illness coverage that would pay up to $10,000 for accidents, and $10,000 for a critical illness.

Another option are Hospital indemnity and hospital admissions policies that would pay a specified amount for a hospital admission, and other specific amounts for daily hospital stays and surgical benefits.

The monthly cost of Gap plans ranges from $30 to $85 for individuals, and $50 to $190 for families.

• Remember, you might be able to pay your monthly premiums, but do you have the funds available to pay your deductibles? Gap plans are designed to reduce or eliminate your risk of using your health insurance.

Any questions please call me at 626-797-4618



In California, as in most states, your individual health insurance rates will be increasing for 2018. During the next 45 days insurance carriers doing business in the state will be announcing their rates for next year. The estimated rate increases for 2018 will be more than 20%. One Sure Insurance is one of those companies that benefit from this, and they will be the most reliable at the moment whenever you need them.

Beginning in 2014, clients have asked why are my rates going up? Since January 2014, most rates for individual plans have increased well over 100%.

Commentators of all political stripes have speculated on the reasons for rate increases; however, until now there has not been a great deal of evidence to support any conclusions.

Earlier in the year I published an article quoting a study by Milliman, a worldwide health care actuarial consulting firm, that detailed by percentages the reasons why rates have increased since 2014.

In the Milliman study, there were two major reasons for the large increase in rates: Guarantee Issue and Community Rating.

1. Guarantee Issue – The waiver of pre-existing conditions. This accounted for 30% of the national average.

2. Community Rating – Rates set by date of birth, residential zip code, unisex, and a 1-3 rate difference between young (under 35) and Old (55 – 64). This means the rate for a 63-year-old may not be more than three times higher than a 23-year-old. The Community Rating accounted for 35% of the increases nationally.

Other factors including taxes and mandates accounted for the remainder of the increases.

The impact of Obamacare’s mandates was studied by McKinsey & Company, the management consulting firm, for the Department of Health and Human Services. McKinsey focused on the hikes in premiums in Tennessee, Georgia, Pennsylvania, and Ohio.

According to the just released study, the increased risk for insurers from guarantee issue and community rating caused between 73 percent and 76 percent of the rise in premiums in Tennessee from 2013 to 2017, between 44 percent and 52 percent in Georgia, between 53 percent and 62 percent in Pennsylvania, and between 41 percent to 50 percent in Ohio.

The CEO’s of Aetna, Anthem, Cigna, and United Healthcare have all agreed with the Milliman and McKinsey studies, citing them as reasons leading to a lack of profitability offering coverage in the individual market in most states.

In California, Aetna never entered the ACA market. Over the last several years United Healthcare and Cigna have exited the individual market, and Anthem will not offer individual coverage (with a very minor exception) in 2018.

• The question that needs to be asked is what action, other than eliminating Guarantee Issue and Community Rating will cause the carriers to reduce premiums for individual plans.

*Modified from the Milliman study, McKinsey study,, and other online sources.



On Monday August 1st, Anthem Blue Cross announced that it is pulling out of the individual insurance market in California, except for three regions in Northern California: Redding, Santa Clara County, and Stockton/Modesto.

  • All other ACA individual Anthem plans will be terminated December 31,2017. This decision does not affect those who have employer based insurance or individuals enrolled in “grandfathered” plans (plans purchased before March 2010).

Anthem’s Medicare Supplement, Medicare Advantage, Part D Drug Coverage, and individual dental, vision, and life policies will be continued to be offered in California.

According to Covered California’s most recent enrollment snapshot from March, Anthem currently covers about 252,560 Obamacare customers, 61% of whom live in regions where the carrier will pull out of the market.

Those numbers do not include people who have purchased Anthem plans outside of the exchange. A Covered California spokesman said in an email that an additional 150,000 Anthem plans are estimated to be in place outside the exchange.

  • How will the termination of your Anthem policy affect your coverage?

On-Exchange plans through Covered California will be moved to another carriers’ plan offering similar coverage if the member does not take any action during the Open Enrollment period to directly change carriers and plans.

The full details of how this will work is still being formulated, and more details should be released shortly.

For those with Off-Exchange plans, you must move to another carrier offering plans in your zip code. The enrollment must take place on or before December 15th, to have a January 1st effective date.

In 2018, Blue Shield of California will be the only carrier offering both a PPO, and HMO plans throughout the state. All other carriers will only offer some form of narrow network plans such as an HMO or Exclusive Provider Organization (EPO).

  • All carriers offering On-Exchange and Off-Exchange plans are indicating double digit rate increases for 2018.

As an example, in Southern California Blue Shield has filed for rate increases of between 18% to 22% for their PPO plans and 9% for their ACO/HMO plans. Other carriers will be releasing information on rate increase during the next few weeks.

In addition to higher rates, most carriers will also narrow their provider networks by only offering HMO or EPO plans with specific provider networks. These plans will not reimburse for any out of network services; therefore, members may be required to change some or all their doctors.

California is still one of the few states where a carrier, Blue Shield of CA, still offers PPO plans. In Arizona, Nevada, and Colorado the only options for individual plans is some form of HMO/EPO.

In addition, California has at least one carrier offering individual coverage in all counties and zip codes in the state. This is not the case in in Arizona and Colorado.

If you are a current Anthem client with an Off-Exchange plan terminating December 31st, please call me (John Barrett) at 626 797-4618, and I will answer your questions.



For those living in California, health insurance will not change dramatically for the remainder of 2017. This is especially true for those who purchase their coverage Off Exchange directly with the insurance company without a federal premium subsidy.

Regardless of what occurs in Congress the plans, rates, and mandates will remain the same for 2017. The reason is that back in July of 2013, Governor Brown signed a law that established, in effect, a mirror image of the ACA (Obamacare) mandates such as the waiver of pre-existing conditions.

Even if Congress eliminated the various mandates of the ACA, state mandates would remain in effect for 2018, unless directly overridden by Congress. California would still require the wavier of pre-existing conditions as a condition of enrollment, along with the other mandates like Community Rating (rates based upon date of birth, zip code, and age bands for older individuals).

Looking at 2018, the forecast is murkier because of the uncertainty of which insurance carriers will continue to offer plans in California, and the rates for 2018 plans. Beginning in May insurance companies will begin submitting their 2018 rates to the Department of Insurance or Department of Managed Care (HMOs).

It is difficult to come to any conclusion other than rates will continue to increase in 2018. The only question is the percentage of increase. If Congress changes the federal premium subsidy or the direct payments to insurance carriers that reduce co-payments, deductible, and out of pocket costs of Covered California purchased plans, then the rates for Off Exchange plans will disproportionally increase to make up for the loss of premium dollars to the carriers.

To understand how the ACA Mandates affected rates in California (and throughout the US), a Milliman research study determined how certain mandates affected rates. The two greatest reasons for the increased rates were Guaranteed Issue (waiver of pre-existing conditions), and Community Rating (date of birth, zip code, age bands).

Milliman estimated that Guaranteed Issue was responsible for 15% to 30% of the increase, and Community Rating 19% to 35% of the increase. Therefore, 34% to 54% of rate increases beginning in 2014 were a direct result of the combination of these two mandates.

Congress has discussed the ability to purchase health insurance across state lines as one method of bringing more competition, and hopefully lower rates. However, purchasing health insurance across state lines has not really been considered by the insurance carriers doing business in California, not to mention the Department of Insurance. During recent conference calls with research analysts, the CEO’s of Aetna and United HealthCare both dismissed the idea of buying insurance across state lines because of the issue of provider networks, and how to set the rates in each state.

Assuming California will require its state mandates to be maintained by the insurance carriers, then it is highly unlikely that there will be any meaningful reduction in rates for the foreseeable future.

*Sources include a Milliman Research Study (2017), and other direct online sources.


Anthem Threatens Obamacare Retreat If Results Don’t Improve

According to a Bloomberg article published online, Anthem Inc., which has so far stuck with the Obamacare markets as rivals pulled back, said it may retreat in 2018 if its financial results under the program don’t improve next year.

  • If California becomes one of the states exited, those with Anthem individual policies will be affected.
  • For 2017, Anthem has already significantly raised rates, and reverted to more network Exclusive Provider Organization, (EPO) from PPOs in Southern California, and most of Central and Northern California.

“If we do not see clear evidence of an improving environment and a path towards sustainability in the marketplace, we will likely modify our strategy in 2018,” Anthem Chief Executive Officer Joseph Swedish said on a call Wednesday discussing third-quarter results. “Clearly, 2017 is a critical year as we continue to assess the long-term viability of our exchange footprint.”

Anthem expects to post a narrow profit margin next year in exchanges created under the ACA, following losses that Swedish called “disappointing.” Profitability will improve thanks to plan changes and premium increases averaging more than 20 percent, but Anthem said it will take more than that to stabilize markets that have so far drawn about half the membership it was planning for.

The company called for eliminating a tax on health insurers, as well as changes to regulations that govern how plans are sold and administered.

“Both the pricing and regulatory environment need to be improved,” Swedish said. He said the company would be “surgical” in assessing where to sell ACA plans for 2018.

Anthem sells health coverage under the Blue Cross Blue Shield brand in 14 states (including California), and has a big position in the market for plans sold directly to individuals. The Indianapolis-based company said Wednesday that it had 889,000 people signed up under individual Obamacare exchange plans, and a total of about 1.4 million members in individual plans.

Large rivals UnitedHealth Group Inc., Aetna Inc. and Humana Inc. have all retreated from many of the Obamacare exchanges. If Anthem pulls back in 2018, it would leave mostly regional and not-for-profit firms on the markets, along with the Medicaid companies Centene Corp. and Molina Healthcare Inc.

Anthem expects the overall market for ACA compliant plans — both on- and off-exchange –will shrink next year, Chief Financial Officer John Gallina said. The insurer’s membership in the individual market will fall as well, he said.

*Modified from a article, and other online sources.



Penalties For Not Having Insurance Have Failed, And The Result Is Higher 2017 Premiums For Everyone

The most controversial part of Obamacare — the mandate that people buy health insurance — is also the glue that was supposed to make the whole scheme work.

An article appearing on, and other information provided by the Wall Street Journal details the mounting evidence that indicates the mandate is failing. The failure of the mandate is causing insurance companies to raise their premiums substantially for 2017.

Congress got insurance companies to go along with the Affordable Care Act in 2010 by striking a grand bargain — private insurers would accept new rules and restrictions in exchange for millions of new customers, many low-cost healthy people who would not break the bank.

The government offered subsidies to help lower-income Americans afford the premiums and threatened to fine people if they did not comply.

But the stick was not enough, and critics contend that the Obama administration weakened it further by wielding it with less-than-enthusiastic vigor.

“Nobody really wants to enforce it … Enforcing the individual mandate is going to hurt politically,” said a health policy counsel for the American Action Forum.

“The size of the penalty is not enough for someone who’s relatively healthy to think it’s worth it for them to pay for insurance,” said a senior research fellow at George Mason University. “Congress took all of the IRS’ enforcement tools away”.

  • Although Congress authorized penalties for failure to purchase health insurance, it limited the ability of the IRS to enforce it. The agency cannot sue, file criminal charges, or place liens on bank accounts to collect. It can send a warning letter or withhold money from tax refunds — if the taxpayer is owed a refund.

The government could crack down. “But aggressive enforcement could backfire politically”, said a senior policy analyst at The Heritage Foundation. “In order to enforce this, it would be pretty ugly”.

  • The analyst said it is not just the stick of enforcement that has proved inadequate — it’s also the carrot of insurance. He said it has been difficult to persuade young and healthy people “to pay for something they might not want or need … A lot of people value holding onto their own money and eating the mandate.”

The result is much lower sign-up rates than experts initially forecast. The Congressional Budget Office forecast 21 million enrollees by 2016. The Urban Institute projected 23.1 million. The Centers for Medicare and Medicaid Services guessed 24.8 million. And the Rand Corp. estimated 27 million.

The actual number was about 12.7 million. With attrition that occurs throughout the year, the number by the end of 2016 is likely to be 10 million to 10.5 million. The people who find the health plans most attractive are those who receive subsidies that cover most of the cost and those who use a lot of medical services.

  • The Urban Institute report from January 2015 projected that 36 percent of enrollees this year would have household incomes below 200% of the federal poverty line, and therefore be eligible for a subsidy. The actual percentage was 66%.

But while the Urban Institute projected that a 25% of enrollees would have incomes above 400% of the poverty line and thus be ineligible for subsidies, the actual share is just 2%. As one analyst said, “If you have a really expensive medical condition, Obamacare made insurance a good deal for you,”. “If people spend their own money, they don’t value the product.” “We know that insurers have enrolled a much more expensive pool than they expected,”. “We know that because they’ve had huge losses.”

To make up the difference, insurance companies have increased premiums. Preliminary research indicates that the average increase was 15% to 16.5% between 2015 and 2016, and that the increase for 2017 will be “much worse.”

*Modified from a article, articles, and other data provided by various online sources.

If you have questions, please call me at (626) 797-4618 or email



California Obamacare Rates To Rise 13% In 2017, More Than Three Times The Increase Of Last Two Years

Premiums for Californians’ Obamacare health coverage will rise by an average of 13.2% next year — more than three times the increase of the last two years and a jump that is bound to raise debate in an election year.

The big hikes come after two years in which California officials had boasted that the program helped insure thousands of people in the state while keeping costs moderately in check.

On Tuesday, officials blamed next year’s premium hikes in the program that insures 1.4 million Californians on rising costs of medical care, including expensive specialty drugs and the end of a mechanism that held down rates for the first three years of Obamacare.

Two of the state’s biggest insurers — Blue Shield of California and Anthem Inc. — asked for the biggest hikes.  Blue Shield’s premiums jumped by an average of more than 19%, according to officials, and Anthem’s rates rose by more than 16%.

  • The rates vary significantly by region and insurer. Los Angeles and the rest of southwest Los Angeles County will see an average increase of almost 14%.

Blue Shield’s preferred provider organization rate in Los Angeles, chosen by 21% of those using the exchange, is increasing by an average of 19.5%.

Blue Shield, in an email to brokers, stated three reasons for the increase:

  • Underpricing of 2016 Rates: 2016 pricing was completed in the first quarter of 2015 and relied heavily on the favorable 2014 healthcare expense experience to set rates.
  • Higher than Anticipated Member Utilization of Healthcare Benefits: According to data, the higher trend was driven by prescription drugs and by members who joined during the special enrollment period. The SEP population had up to 30% higher utilization than members who joined during the standard open enrollment period.
  • Removal of ACA Reinsurance: The reinsurance program had provided funds to plans with higher-cost enrollees to offset those medical costs and guarantee coverage regardless of health status. The end of this program alone added 4.6% to our 2017 rates.

An Anthem spokesman stated “Factors such as increased use of medical services and added costs of drugs and medical therapies put upward pressure on rates and underscore the additional work that needs to be done to moderate the growth in healthcare costs.”

Covered California officials defended the system Tuesday, saying that the competition between insurers offering coverage on the exchange was working to keep rates lower than they otherwise would be.

Around the country, several insurers, including giant UnitedHealth, have stopped selling health plans on the exchanges, and a number of new nonprofit health insurance coops have gone out of business.

Americans who make too much to qualify for subsidies are likely to feel the brunt of the premium hikes. That may increase pressure to review the exchanges in 2017, for ways to make health plans more affordable.

If you have questions, please call me at (626) 797-4618 or email

*Modified from and online articles; Blue Shield notification to brokers.



Has your individual health insurance policy recently been cancelled?

Are you between jobs, and need coverage for a few weeks or months?

Are you a college student in need of coverage until classes begin?


  • Short term medical is a limited form of health insurance designed to bridge you to permanent individual or employer based group coverage.
  • Short term medical insurance is designed to protect your assets by paying for catastrophic hospital medical costs.
  • The coverage will only pay for your inpatient hospital, ER, or Urgent Care medical services.
  • Some policies may include some form of office visit co-payments before or after the deductible.
  • Drug coverage is usually limited to inpatient hospital; however, some carriers may include a drug discount card.
  • Pre-existing conditions diagnosed during 12 months prior to enrollment are normally excluded. In addition, carriers may also decline enrollment if a major illness has occurred within the last 5 years.
  • The coverage is sold on a month to month basis, up to a maximum of 6 months. Some carriers may allow the policy to roll over for additional days or months.
  • You may tailor the coverage to the actual number of days needed until the effective date of permanent insurance.
  • You may select policy maximums that range from $750,000 to $2,000,000 per person.
  • You may select a deductible from $500 to $7500; co-insurance (the amount you pay after deductible) of 20% or 50% making your total out of pocket costs (your maximum financial risk) $1,500 to $10,000, including deductible.
  • You have a choice of having an effective date the day after enrollment or up to 30 days in the future.
  • You may pay on a monthly basis or the total premium up front for the actual number of days of the policy.
  • The premiums may only be paid by credit card.
  • You may enroll directly online, and after approval the carrier will automatically download your ID card(s) and Certificate of Coverage.

If you have questions, contact me directly at (626) 797-4618 or email me at


California Voters Are Becoming More Concerned About Healthcare Costs

The cost of getting healthcare remains a major concern, eclipsing worries about having insurance, according to a new USC Dornsife/Los Angeles Times poll. The widespread worry about costs indicates a potential shift in the debate over healthcare.

Lawmakers increasingly have been hearing complaints from their constituents about the cost of care, and polls have found that prescription drug prices, surprise medical bills and other pocketbook issues concern voters more than the future of the health law.

Echoing that national trend, almost two-thirds of voters in the USC/Times survey say they worry “very much” about rising health costs, with only 10% saying that is not something they worry about.

Cost concerns were most widespread among those in their 50s and early 60s. Indeed, that age group consistently showed the highest levels of anxiety on a series of healthcare concerns.

  • For a significant number, the healthcare law itself takes blame for rising costs. Just over half of those surveyed said they believed that costs for average Americans have “gone up a lot” because of the law, compared with roughly one-third who said that the law had not caused that to happen.
  • Most Americans have been forced to confront increased costs for health coverage for years – a trend that began long before the passage of the reform law. Employers have continued to shift costs to their workers, mostly in the form of higher deductibles and co-payments. Although those higher costs may not have been caused by the new law, many blame it.
  • The law clearly has raised costs for one relatively small slice of Americans – mostly healthy, self-employed people with middle-class or higher incomes who were previously able to buy low-cost policies on the private market.
  • The new law requires those people to buy more comprehensive policies, which provide greater coverage, but at a higher price. Covering sicker customers who used to be denied insurance has also led insurers to raise some premiums.

Low- and middle-income Americans get subsidies under the law that lower their monthly premiums, but higher-income Americans do not.

Most California voters have a positive view of their own healthcare and a somewhat positive view of healthcare in the state, the poll found. Seven in 10 rated their own healthcare as “excellent” or “good” while just under three in 10 called their care “fair” or “poor.”

*Modified from an article, and other online sources



UnitedHealth To Stop Selling Obamacare Coverage In California

UnitedHealth Group Inc. told brokers that it has filed paperwork to offer plans in just six states’ health-law marketplaces next year, providing the most complete picture so far of its previously announced widespread withdrawal.

The biggest U.S. health insurer said in April that it would pull out of all but a handful of the 34 states where it was selling the Affordable Care Act exchange plans, in the wake of mounting losses in that business.

Since then, the insurer’s 2017 exchange decisions have been emerging piecemeal as various state regulators disclosed that UnitedHealth wouldn’t be in their exchanges next year.

Tuesday, California officials became the latest to say UnitedHealth was leaving, when a spokesman for the Covered California exchange confirmed that the insurer wouldn’t participate in 2017.

  • The carrier also told brokers that during the next few weeks it would begin informing consumers enrolled in its exchange plans in states where it will pull out. Existing plans are effective through the end of 2016, and consumers can switch to different insurers during the fall’s open enrollment period.

In a statement Tuesday, UnitedHealth said “the smaller overall market size and shorter term, higher risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis.” But it said the company is “an advocate for more stable and sustainable approaches to serving exchange markets and those who rely on it for care.”

  • Overall, insurers’ approach to the exchanges for next year is mixed, in the wake of financial results that have been disappointing for many companies. Several insurers, including state Blue Cross Blue Shield plans, have reported similar challenges in recent months. And more than a dozen nonprofit insurance cooperatives created through the law have closed because they were overwhelmed by medical claims they couldn’t afford.

Many other insurers are sticking with the new marketplaces, though state filings have shown that several are seeking significant rate increases for next year.

  • Many consumer groups welcomed UnitedHealth’s arrival in Covered California in order to give people more choice and inject more competition into the market. The top insurers in the exchange, led by Blue Shield of California and Anthem Inc., control more than 90% of Covered California enrollment.

The state exchange had limited UnitedHealth to selling exchange plans in several smaller markets for 2016 because it didn’t participate the first two years

*Modified from online articles from,,,, and other online data sources.