Kaiser pushes exchange premiums down

By Paul Sisson 4:04 P.M.AUG. 1, 2014

Dr. Mohammad Ashori, a family medicine practitioner with Kaiser Permanente, talks with patient Jose Marasigan at the Vandever Medical Offices on June 23, 2014. — Peggy Peattie

As a general rule, insurance premiums tend to increase every year.

That is not the case for the latest batch of Covered California health-exchange rates announced Thursday for Kaiser Permanente.

In addition to updating its “shop and compare” website with 2015 rates this week, the exchange released a comprehensive guide that lists rate increases for each insurance carrier in its 19 pricing regions statewide.

The document shows each carrier’s average rate of increase in every region, as well as the highest rate and the lowest one. The goal is to give consumers a macro view of the best- and worst-case premium changes.

While most carriers have proposed single-digit rate increases, Kaiser is planning to drop its rates in many cases. (All the rate changes are awaiting approval by state regulators.)

In nine of the 18 regions where Kaiser sells Covered California policies, the average Kaiser premium will go down in 2015, and in no market will premiums rise by more than 1.7 percent on average. The statewide average rate of increase will be 4.2 percent.

As for the range of highest and lowest rate changes, Kaiser also stands out. The health provider intends to offer rate savings to at least some policy holders in each region it serves, and in no region will anyone see an increase of more than 2 percent.

Some of the decreases will be dramatic. Some consumers in Los Angeles and Fresno, for example, will see their rates plummet by 14 percent next year.

In San Diego County, Kaiser’s rates will fall by 1.6 percent on average.

By comparison, Anthem Blue Cross, which sold the most Covered California policies in 2014, will decrease its rates in only one region — an area that includes five counties in the northern Central Valley.

So why is Kaiser bucking the general trend by lowering its rates for the health exchange?

William Caswell, senior vice president of operations for Kaiser Permanente, said the downward premium push comes with a strong belief in the nonprofit organization’s integrated system — where Kaiser both provides medical care and does the financial underwriting.

“We do have confidence in our integrated model, and it is playing out in the marketplace,” Caswell said.

Covered California policies, which stemmed from the federal Affordable Care Act, took effect this year.

In most markets, Caswell said, Kaiser’s plans were priced just about in the middle of the overall range of premiums for the health exchange. As the year has progressed, Kaiser did not see Covered California enrollees using appreciably more health services than Kaiser’s millions of other members in the state.

Caswell also said Kaiser, as both insurer and care provider, has a special ability to track costs in real time.

“We have a lot more data on these new members through the first three months or so than any other insurer,” he said.

Larry Levitt, senior vice president at the Kaiser Family Foundation, a nonprofit not associated with Kaiser Permanente, said that advantage is a real one.

“Because they are the insurer and the provider, they know exactly when someone is coming in to use services. Every other insurer has some amount of time lag from when services are provided to when claims are settled,” Levitt said.

Overall, he said, Kaiser’s downward premium move looks like a hunt for more market share and an increase in the level of comfort with its insurance plans for Covered California and the people buying them.

“In a lot of places, we’re seeing that insurers are becoming more aggressive (with price competition) in the second year,” Levitt said. “There were insurers who went into the first year feeling nervous and as a result were conservative in terms of their approach.”

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