COMPARE
THE MAJOR CALIFORNIA HEALTH
CARRIERS
The health insurance carrier you
choose will have a big impact on
both the cost (now and future)
and relative satisfaction with
your health insurance benefits.
Let's take a look at the
landscape for California health
carriers.
We judge
the carriers
based on
five main
criteria
which are
strong
indicators
of your
likely,
long-term
satisfaction.
Next...Carrier
by Carrier.
We will list
them in
descending
order
according to
our
experience
(100's of
groups and a
decade in
the market)
in terms of
these five
criteria.
Five
Critical
Criteria
1.
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
cost.
Some large
multi-line
carriers
like
Principle
offer
extremely
rich
benefits
that have,
in our view,
priced
themselves
out of the
market.
There's a
"sweet spot"
where plan
design meets
company
budgets 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.
2.
Extensive
provider
network.
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
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.
3.
Flexibility
and Scope of
plan design.
This
is
relatively
new and
pioneered by
Blue Cross
of
California
with their
Employee
Elect
offering in
the late
90's.
Before then,
typically
you could
only offer
one plan to
your
employees.
Good luck
making that
fit every
employee's
needs.
Only large
companies
could offer
a true
"cafeteria"
offering
with
multiple
choices.
Employee
Elect
essentially
brought this
flexibility
to the
California
Small Group
health
market.
Blue Shield
and Health
Net have
since
followed
suit and
Kaiser is
experimenting
with it
although
they're PPO
offering is
limited.
The ability
to offer any
plan (HMO,
PPO, and/or
HSA) to each
employee and
lock your
company's
budget to a
percentage
of given
plan or a
fixed dollar
amount is
the best of
both worlds.
Employees
make
decision
based on
their health
care needs
and the
company can
forecast a
fixed and
stable
budget.
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.
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 the group
plan (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,
health
insurance
premium has
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?
Carrier by
Carrier in
descending
order
Anthem Blue
Cross of California
Blue
Cross is
owned by
Anthem,
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
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
employees in
other
States.
3. Flexibility - As mentioned above, 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.
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.
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.
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.
It is one of
the few
non-profits.
Cross and
Shield are
two
separate,
completely
independent
carriers at
the Small
Group level
(2-50
employees).
If PPO needs
to be an
option or
employees
are out of
State, 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
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 in
other
States.
Their HMO is
comparable
to Cross.
3. Flexibility - They do not have the full suite of plan
options for
each
employee as
Cross does
with their
Employee
Elect.
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
plans on the market. They have 7 HMO
plans, 4 HSA
plans, and
13 PPO
plans.
4. Ease of Use - Their 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).
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.
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.
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.
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.
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
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 Blue
Cross of
Calfornia,
Blue Shield
of
California,
Health Net
of
California,
and Kaiser
separately
as they
really are
the
strongest
carriers.
There are
many other
options on
the market,
but from our
experience,
they usually
are
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.
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
aquisition.
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
other
questions
you have.
We really
want to
provide you
a resource
to
understand
your
options.
Again, we
would hope a
company
would
provide us
this
information
if we were
in the
market.
It's like
having a
friend in
the business
who gives
you the real
story.
Other
important
resources:
California
Small Group
health quote
California
Small Group
online
doctor
listing
California
Group
Enrollment
and
Eligibility
Center
