Group Health Insurance in California and the ACA

The health insurance market in California is undergoing enormous changes as the Affordable Care Act (ACA) takes full effect this year as millions of residents become eligible for public insurance or subsidies for private insurance. Many employers, such as yourself, have to consider what the impact, if any, that the ACA may have on the way employees consider their options for healthcare insurance, and you also may have concerns as to what it means to group health insurance plans here in California.


California’s delegated model may have significantly contributed to the relative success in containing health care costs, however, the delegated model is threatened by three emerging market developments:


  • An enrollment shift from HMOs to PPOs


  • The move of two large California insurers to out-of-state management, and


  • A sharp increase in provider leverage over health plans, making fee-for-service payment more attractive to physician groups


As the delegated model becomes less attractive, this will inevitably have an affect on the state’s health care spending trends, as well as federal efforts to develop new provider payment mechanisms that include capitation (capitation is a payment arrangement for health care service providers such as physicians or nurse practitioners).


Managed Care in California and cost concerns


HMOs have long had a large role in the California health insurance market, constantly challenged by employees who prefer more choices and options afforded by the slightly more costly PPOs. But this role is also changing in response to pressure from employers to control their health care spending by raising their employees’ share of costs.


Why most employees should remain on Group Health Insurance plans in California


Despite what may seem like cost saving options, if an employee chooses to buy one of the less expensive insurance plans sold through the health law’s marketplaces, they may find that some plans will not pay for a doctor visit before they meet their annual deductible, which could be thousands of dollars.