California’s Exchange Offers A Competitive Marketplace

The California exchange market is shaping up to be more competitive than its 2012 individual market, according to a report by the Kaiser Family Foundation. All three indicators point to increased competition (the Herfindahl–Hirschman Index, market share of largest insurer, and number of insurers with more than 5% of market share).

California’s individual market was highly concentrated in 2012, but the exchange market has only moderate concentration. Eleven insurers are participating in California’s exchange throughout the state, including eight plans that previously made up 90% of the 2012 individual market.  Four new plans (L.A. Care Health Plan, Molina Healthcare, Western Health Advantage, and Valley Health Plan) are also being offered, but together only make up 5% of the exchange’s market.

Not all plans are available in all areas of the state. WellPoint, the parent company of Anthem Blue Cross of California and the state’s largest individual market insurer, has significantly less market share in the exchange than it did in the 2012 individual market (30% versus 47%).  Blue Shield of California picked up substantial market share, most likely because it was able to offer the lowest premiums in several parts of the state.

Over time, the availability of premium tax credits, which are only available inside exchanges, should greatly increase the number of participants.  If these new avenues for enrollment are more or less competitive, the markets are likely to be as well, according to researchers. For more information, visit .http://kff.org/health-reform/issue-brief/sizing-up-exchange-market-competition.

Last Updated 11/25/2020

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