Anthem exits Covered California in Santa Cruz County, as rates increase 12.5 percent

Aug. 02--SANTA CRUZ -- Anthem Blue Cross is bowing out of the Covered California market in Santa Cruz County as of Jan. 1, and 1,360 county residents with Anthem will have to pick a new one for 2018.

Most Covered California plans will be more expensive next year, up 12.5 percent on average in Santa Cruz County and statewide. In releasing 2018 rates Tuesday, Covered California officials recommended people shop around.

Rates in Santa Cruz County will vary significantly from insurer to insurer, starting Jan. 1.

--Blue Shield, with 6,010 enrolled, will raise rates 8-24 percent, depending on the plan.

--Kaiser Permanente, which opened Jan. 1 and has 4,700 enrolled, will raise rates 3-7 percent.

--Health Net, whose enrollee numbers have dwindled to 570, will lower rates 10 percent.

The increases come on top of 2017 increases that averaged 28.6 percent in Santa Cruz County, higher than the state average.

"Change is the new normal," veteran Santa Cruz insurance agent Pamela Fugitt-Hettrick said after getting up at 4 a.m. Tuesday to attend a Covered California seminar for agents in Sacramento.

Only two people from Santa Cruz County attended: Fugitt-Hetrick, who has been certified to sell Covered California policies from the start, and her associate LaVyrne Lomas. They work at DCD Financial and Insurance Services.

SURCHARGES POSSIBLE

Local residents checking the rate book must look for Region 9, where Santa Cruz County is grouped with Monterey and San Benito counties.

Peter Lee, Covered California's executive director, cautioned that these rates are not final because of uncertainty over federal funding.

In late August, premiums could go up another 12.4 percent on average for silver plans if Covered California deems that is necessary to address uncertainty over federal funding that reduces deductibles and co-pay for 650,000 Californians. A silver plan covers 70 percent of the annual health care cost, with a $35 copay for a primary care visit.

This year, 58 percent of those who signed up for health insurance under the Affordable Care Act qualified for these cost reductions, but these subsidies were the subject of a lawsuit by House Republicans since Congress had not appropriated funds to pay for them.

A federal judge ruled in 2016 to end the subsidies, but the Obama administration appealed. If the Trump administration dropped the appeal and Congress did not appropriate funds, the subsidies could stop.

ANTHEM DECLINE

Anthem dominated the Covered California market in Santa Cruz County's region, with a 64 percent share in 2014. Same thing last year, when Anthem held a 64 percent share compared to 32 percent for Blue Shield and 4 percent for Health Net.

This year, Anthem's share of the local market is 39 percent.

"They're not a player in our area," said Fugitt-Hetrick said of Anthem.

She said Anthem switched to an EPO, an exclusive provider organization, not covering out-of-network physicians -- and doctors with Palo Alto Medical Foundation, a big group in the county, declined to sign. Then Anthem rates went up.

"That made it extremely unattractive," she said.

Neither was she surprised Kaiser got 17 percent of Covered California enrollment so quickly.

"Kaiser held down the rates," she said. "All the healthy people went there. People who have a relationship with a doctor or a chronic disease are more likely to pay hundreds of dollars to stay (with their doctor)."

As a health maintenance organization, Kaiser does not cover out-of-network care, which cuts costs, and in the county, Kaiser provides hospital care at one location, Watsonville Community Hospital, rather than giving members choices. The three Kaiser clinics are covered; clinics cost less to operate than hospitals.

Like Anthem, Health Net offered an EPO, not covering out-of-network physicians, and its enrollment dwindled further this year.

"It's like they've left without leaving (the market)," said Fugitt-Hetrick.

DON'T DELAY

She recommended people read up and make a choice between Nov. 1 when the sales window opens and Dec. 15.

On Dec. 16, Covered California enrollees will be "randomly assigned" to a plan, she said, "most likely Kaiser, because it's lower cost," and that likely would mean switching doctors.

If that plan is not a fit for you, and you pick another, the deductible you've paid does not roll over and that money is gone, she added.

At Tuesday's Covered California seminar, agents were asked how the program could improve.

Fugitt-Hetrick was pleased a software update allows agents working at an agency to follow up on clients who call and have forgotten their agent's name.

However, she said, another software update asking details on income source is problematic for people with more than one job, sending people to Medi-Cal instead of totaling the income.

REGION 9 RATE CHANGES

Santa Cruz County is in Covered California's Region 9 with Monterey and San Benito counties. This chart shows Region 9 rate changes for 2018 and size of the potential surcharge on silver plans, chosen by 58 percent of Region 9 enrollees, if the federal government halts 2017 subsidies for deductible and co-pays in 2018.

Insurer 2018 rate Surcharge

Anthem EPO Not in market NA

Blue Shield PPO Up 10-23% 8%

Blue Shield HMO Up 8-24% 8%

Kaiser HMO Up 3-7% 15%

Health Net EPO Down 10% 13%

Source: Covered California

SANTA CRUZ COUNTY ENROLLMENT

March 2017

Blue Shield PPO: 6,010

Kaiser HMO: 4,700

Anthem EPO: 1,360

Health Net EPO: 570

Total: 12,640

Source: Covered California

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