Price matters: Calif.'s Obamacare insurers see sign-up shift

California's Obamacare marketplace this enrollment season saw the largest four insurers lose a chunk of their combined market share to smaller competitors, as consumers appeared sensitive to price differences for health coverage.

Last year on the Covered California exchange, which sells private Obamacare health insurance plans, four major insurers captured almost 95 percent of all sign-ups by customers.

But in the recently concluded third Obamacare enrollment season, those four carriers ended up with 90 percent of sign-ups, Covered California revealed Wednesday.

And the big four garnered a lower share of new customers — 83 percent of the newbies, an 11 percentage point decrease from last year, officials said.

Jose Mora, 62, signs up for Obamacare with Kristie Navarro, right, as people sign up for Obamacare in Los Angeles on February 15, 2015.
Anne Cusack | Los Angeles Times | Getty Images
Jose Mora, 62, signs up for Obamacare with Kristie Navarro, right, as people sign up for Obamacare in Los Angeles on February 15, 2015.

Data also showed how some insurers — big and small — that had lower premium price hikes than competitors saw a marked uptick in sign-ups relative to costlier health plans.

One of the smaller insurers, Molina Healthcare, saw its enrollments more than double in 2016, from 37,000 or so customers in 2015 up to 88,000 this year. Molina had actually lowered its premiums for this enrollment season. The resultant enrollment bump raised Molina's overall market share from 2 percent last year to 6 percent.

"Price matters, and just like any other business, consumers want the best value possible," said Anne Price, director of health plan management at Covered California.

"We have created a marketplace where carriers are fighting for people's business. With more than 1 million enrollees, our customers are flexing their consumer muscles."

Covered California is the largest of the 13 Obamacare exchanges run by individual states and the District of Columbia, with 1.57 million customer sign-ups in the most recent enrollment season. More than 439,000 new customers signed up this year.

The federal government's exchange, HealthCare.gov, handles sign-ups for residents of 38 states. However, HealthCare.gov has never publicly disclosed the market share of enrollments for individual insurers.

Four large insurers capture the lion's share of exchange-based enrollments in California: Anthem Blue Cross of California, Blue Shield of California, Health Net and Kaiser Permanente.

Anthem Blue Cross was the leader in enrollments in the state in 2015, with 393,911 customers signed up, accounting for 28 percent of Covered California's market share. But Anthem's market share fell to 25 percent this enrollment season, when it signed up just 111 additional customers.

Blue Shield, which held second place with 25 percent of the exchange last year, moved into first place with 28 percent of the market, after increasing its customers from 348,607 to 433,111.

Covered California noted that "Blue Shield had one of the lowest rate increases in the state for 2015." And Anthem "had the highest rate increase," the exchange pointed out.

"Competition is driving the market," said Peter Lee, executive director of the exchange. "Consumers are shopping around and selecting the health plan that best fits their needs and pocketbook."

Kaiser Permanente retained about 24 percent of the exchange market, enrolling 374,454 customers in 2016. The fourth-largest insurer, Health Net, saw its market share decrease by 4 percentage points to 14 percent after seeing enrollment drop by more than 35,000 people.

Covered California's report about insurer market share came out a day after a state audit criticized the exchange for not sufficiently justifying its decision to award a number of large contracts without subjecting the contractors to competitive bidding. The audit found that 9 of the 40 justifications for sole-source contracts the exchange issued "were insufficient" according to the policy adopted by the exchange's own board.

"Covered California's contracting practices must be improved to ensure the integrity of the process it uses to award sole-source contracts," the audit said.

The exchange hasn't disputed the audit, but also has reportedly said it has adopted new contracting policies.