2 Big IFP Players in California: Kaiser Permanente and Blue Shield

by John Hansen

Kaiser Blue Shield Big Players in CaliforniaAs Anthem and Health Net Drop Market Share, Two Carriers Begin to Dominate the California Individual Market

Up until this year, there have been four leading carriers offered on the California Health Insurance Exchange: Anthem Blue Cross, Blue Shield of California, Kaiser Permanente and Health Net. These four insurance companies split market share somewhat evenly. Blue Shield Covered California and Anthem Blue Cross California went back and forth for first position and enjoyed about the same market share with Covered California Kaiser plans trailing close behind.

However, in 2017 the landscape changed dramatically. Kaiser Permanente moved up to #1 and Blue Shield of California continued their pattern of strong, steady growth. However, Anthem Blue Cross dropped dramatically from 26% market share down to 18%. And, Health Net, who had already been trailing a bit behind the top three, dropped from 18% down to 10% market share.

In many people’s minds, Anthem and Blue Shield are basically the same product. So what happened? What’s the difference?

Why did Anthem fall behind Blue Shield in California?

Blue Shield is a not-for-profit organization, which helped them keep prices low. Anthem, pressured by investors, had to make hard decisions to keep profits up. Anthem stopped offering PPO coverage and switched to only offering EPO. Also, they cut back on provider networks. Anthem’s failed merger with Cigna was also a blow to the company.

In light of all these challenges, some have questioned whether Anthem Blue Cross might withdraw from the individual market in California.

Is there enough competition in the California IFP market?

So far yes. However, this change of watching the top 4 carriers become the top 2 carriers is of concern. If Health Net and Anthem continue to lose market share, this could result in less pressure on Kaiser Permanente and Blue Shield to keep their rates low.

However, Blue Shield of California is on the warpath right now to compete with Kaiser Permanente on affordability and quality. Shield’s Trio product will help them stay competitive with Kaiser Permanente and may put enough pressure on Kaiser for them to keep their rates low.

The fact that Anthem and Health Net are still in the game along with the presence of other more regionalized carriers is helpful as well.

Molina Health Care has been an incredibly strong force for affordability in California. However, after experiencing financial problems, losing two top Molina family chief officers and getting hit with Risk Adjustment Factor penalties, Molina may have a hard time continuing to keep their rates so low in 2018.

In short, there are some concerns about the California individual health insurance market, but still the golden state is expected to continue to have the strongest individual market in the nation in 2018.