Top California Health Plans Compete for Market Share

by John Hansen

Blue Shield and Anthem Blue Cross Battle It Out While Kaiser Permanente Gains Market Share

In 2014 and 2015, Anthem Blue Cross Covered California products were the top selling plans in the Health Insurance Marketplace. Anthem was #1 for Obamacare health insurance enrollments through Covered California, the ACA Exchange for the state of California, two years in a row. However, in 2016, Blue Shield of California took the lead. Also, Kaiser Permanente is gradually increasing its membership. Find out about how these top California health plans are fighting for market share.

How did Blue Shield pass up Anthem in Open Enrollment 2016?

With Blue Cross/Blue Shield, these California health plans compete mostly for network and price. In 2015, Blue Shield fought aggressively to expand its network, while staying competitive in price. This paid off for Covered California Blue Shield products as they became the top California medical insurance carrier in the State Exchange for the 2016 Open Enrollment.

When a carrier has bigger networks in certain regions, those regions tend to do the best. Often, consumers first find out what California health plans their doctor takes. Then, they make a decision regarding insurance coverage based on what coverage their physician will accept.

However, having the top California health plan networks often comes with a higher cost. Adding medical networks involves negotiations on pricing, and some leading networks are more expensive than others. The more networks a health plan adds, the more they have to raise their rates for coverage in that region.

Often, you’ll find that in one particular region Anthem Blue Cross has the best rates and Blue Shield has the better network. Or vice versa. When a top CA health plan can negotiate competitive rates with a medical provider, this is a big win for them because it allows them to expand the network without increasing rates.

For a consumer, if you can find a doctor you like with a top California health plan that has a smaller network, often you can get more affordable health insurance premiums. Later, if you decide to switch doctors or you need to see a specialist, you will have fewer options, but in the meantime, you’ll enjoy cheaper health insurance coverage.

Who will be the top California health plan next year?

Likely it will be one of the Blues. Blue Shield and Anthem will continue to fight to expand their networks. At the same time they negotiate with top providers for lower rates. In regions where one of these CA health plans is more successful at this, that medical insurance company will take more of the market share.

Often, medical networks will only contract with one of these two top California health plans, not both. There are several reasons for this. If they contract with both, then Anthem and Blue Shield are competing with each other for the same membership. This causes health insurance rates to drop, which causes the CA health plans to make less money, which ultimately causes the insurance companies to put more pressure on these networks to lower their rates.

When the medical networks contract with only one California health plan, it keeps the provider in the driver’s seat. They will just contract with the carrier who gives them the most money for the various medical services they provide.

Kaiser Permanente Slated to Be California’s Top Health Plan

While competing with each other, the Blues will have to keep looking over their shoulders. Kaiser Permanente is on the prowl. California’s top HMO is gradually increasing market share and becoming a more formidable opponent. Kaiser is hiring up the best new doctors out of medical schools. They are building more hospitals and medical facilities. And, their integrated model gives Kaiser big advantages when it comes to providing affordability and the highest quality of care.

If Anthem and Blue Shield are not careful, they can end up harming each other to the point they have difficulty competing with Kaiser Permanente. At this point, the Blues still dominate the California market, but they are very aware that the new kid in town could ultimately dethrone them. Kaiser Permanente is already the leader when it comes to health outcomes, but eventually it is expected to be the top California health plan in the state in regards to enrolled members.