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Insurance companies agree to sell policies in California exchanges

Thirteen insurance companies in the state of California announced Thursday they will sell policies in the new exchanges which are being created under Obamacare. Some claim the Sunshine State could be the model for other states of how insurance might function under the new law.

Negotiations for the new policies were aggressively negotiated by Peter V. Lee, executive director of Covered California, the state agency running the exchange. Experts claim the rate increases for current insurance holders, at least those who are under Blue Shield of California, may be as high as 13%, not the 30% which had been feared.

Lee worked with 33 insurer companies and actively negotiated with them over their proposed rates and the kind of network of doctors and hospitals they would offer. Lee hopes that plans will be affordable and allow customers to access a majority of the hospitals and doctors in the state.

Insurance companies cost likely to rise

Although President Obama had claimed Obamacare could lower the cost of insurance anyone familiar with the current programs understands that costs are likely to rise, maybe substantially, to cover people who now have no insurance and are likely to have expensive medical problems. Officials in Covered California claim the rates for small business as individuals should be about the same.

Paul Markovich, the chief executive of Blue Shield, claims the changes in the market will make the individual much more like an employer. He believes that whether you receive insurance through an employer or you decide to purchase insurance on your own you should be able to purchase a policy with a “more standardized benefits,” even if you have an expensive medical condition.

People watch insurance companies in California

Other states such as Vermont and Washington have presented details of their state’s exchanges, but California is truly the state to watch. If California cannot make the Health System Change work there will be questions about how successful the new law will be.

California’s aggressive approach most closely resembles Massachusetts where the state worked with insurers. Other states have been less aggressive in negotiating discount rates.

Not all insurance companies are participating

Although the state has negotiated with several insurance companies to participate in the exchanges, there are several other large companies who will be absent from the exchange, including the UnitedHealth Group, Aetna and Cigna.

Some insurers such as UnitedHealthcare, have decided to wait out the first year to evaluate the “economics, sustainability and dynamics of the exchange.” If UnitedHelathcare believes the exchanges could be a growth market for their consumers they may decide to enter the marketplace the second or third year.

Other insurers who will be absent from the exchanges the first year include UnitedHealth Group, Aetna and Cigna.

Costs are high for the low-income to purchase insurance

Most experts concede low-income individuals may still find paying $300 or more a month for a plan to be prohibitively expensive. But others argue this agreement is a promising first step in the effort to force plans and providers to work harder to offer more affordable insurance.

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