California: CoveredCA announces *approved* rate changes/coverage expansion for *SHOP* plans

I don't usually post a whole lot about the small group market (other than occasionally trying to track how many SHOP enrollees there are by state and nationally), but this seems like pretty good news given how chaotic the individual market continues to be...

Covered California for Small Business Announces Rate Change and Expanded Coverage Choices for 2017

  • Statewide weighted average rate increase is less than 6 percent.
  • Blue Shield of California expands to Full PPO network statewide.
  • Kaiser Permanente moves into Santa Cruz County.

SACRAMENTO, Calif. — Covered California announced today the rates and expansion plans for its small group health insurance exchange, Covered California for Small Business. The statewide weighted average rate increase is 5.9 percent, for employers and their employees beginning Jan. 1, 2017, which is down from the 7.2 percent increase in 2016.

“Covered California is building competitive insurance marketplaces that work for both individuals and for California’s small business market, bringing choice, stability and rate moderation to employers, their employees and the many consumers who don’t have employer-based coverage,“ said Covered California Executive Director Peter V. Lee. “The options and rates announced today demonstrate that the marketplaces are working to keep insurance premiums under control, and they are giving consumers more choices than ever.”

Starting Jan. 1, Blue Shield of California will take its Full PPO plan statewide across all metal tiers with coverage available to employees working out-of-state. Blue Shield of California will also offer a new plan, Trio HMO Network, powered by a recent innovation in health care, the accountable care organization (ACO). Additionally, Kaiser Permanente will bring coverage to Santa Cruz County. Both expansions improve options for employers in rural parts of the state and expand access to the small business tax credit only available through Covered California for Small Business.

“The expansion of the small group market is allowing thousands of businesses to take advantage of the new control and choice now offered by Covered California for Small Business,” said Kirk Whelan, director of Individual and Small Business Outreach and Sales. “Employers can set the level of how much they spend toward premiums, and they have the flexibility to allow employees to choose a plan that is one level up or one level down.”

Whelan also noted that Covered California for Small Business operations are sound, with new employers being enrolled within three days of filing an application, and a year-over-year retention of almost 90 percent. There is also growing interest and participation among insurance agents certified to sell plans on the exchange.

“We’ve seen a near doubling since 2014 in the number of agents writing policies, with many agents continuing to enroll multiple groups throughout the year,” Whelan said.

Covered California for Small Business also announced the addition of Rogers Benefit Groups to the ranks of general agents working with the exchange. The company joins general agents Claremont Insurance Services, Dickerson Employee Benefits, LISI and Warner Pacific.

All six carriers participating in 2016 will return for 2017: Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, Sharp Health Plan and Western Health Advantage.

Currently, more than 28,000 individuals have insurance through Covered California for Small Business, which makes it one of the largest Small Business Health Options Programs in the nation.

Sidenote: First, Covered California changed the branding of their SHOP program to "Covered California for Samll Business", which is less creative than SHOP, but also more accurate, since technically speaking, SHOP's acronym should really be "SBHOP" which is kind of awkward.

As for CA only having "one of" the largest SHOP enrollments: You would think that California, being by far the largest state, would also have the largest number of covered lives in the SHOP program. The reason this isn't the case is because both Vermont and DC require all small business enrollments to be run through their SHOP programs, while the DC shop program is also how all 12,000+ Congressional staffers receive their healthcare policies. As a result, both have SHOP enrollments extremely disproportionate to their size.

Lee pointed to the moderate rate change for Covered California for Small Business as another example of the benefits the Affordable Care Act is delivering for millions of Californians and Americans across the country.

“While some have focused on large potential increases in some parts of the country, there has been little attention paid to the fact that for the individual market, 2017 is a transition year,” Lee said. “It is important to remember how much of an impact the end of the temporary reinsurance program is having on rates, and the relatively low increase for small business helps focus attention on what stability can look like.”

The reinsurance program was designed to moderate rate increases during the first three years while exchanges were being established. The American Academy of Actuaries estimates the removal added up to seven percent to premiums for 2017.

“Take that one-time adjustment away and the rate changes for individual and small group marketplaces in California would be nearly identical,” Lee said. “We are building competitive markets where consumers win. Covered California brought choice to the individual market and now we’re doing it in the small business market.”

Businesses with up to 100 employees can apply for health insurance coverage for their workers through Covered California for Small Business. Federal tax credits may be available to employers providing insurance through Covered California for Small Business. Visit www.CoveredCA.com/forsmallbusiness/ for information on how to apply.

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