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California’s Market Based Healthcare System

Health insurance carriers form the backbone of California’s market-based health care system, serving about two-thirds of the state’s population.
In addition to covering the privately insured, these companies also serve large portions of the publicly insured, through Medi-Cal, Healthy Families, Medicare, and other programs.In California, oversight of health insurance is primarily the responsibility of two entities: the California Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI). DMHC regulates health plans — health maintenance organizations (HMOs) and certain preferred provider organizations (PPOs) — while CDI has jurisdiction over traditional fee-for-service health insurers and most PPOs. Different statutes and regulations govern carriers under the two bodies. Larger companies typically operate a carrier under each regulator, selling products under a common brand name. Drawing on comparable information from both regulators when available, this report gives an overview of market share, enrollment, financial performance, consumer satisfaction, and pay-for-performance participation for California’s health plans and insurers.

Key findings include:

  • Five carriers accounted for three-fourths of the $100.8 billion health insurance revenues in California in 2009.
  • Since 2007, enrollment in both DMHC- and CDI-regulated plans has fallen. The onset of recession may have been a factor in the decline.
  • Individual enrollment fell by 32% and group enrollment fell by 8% in the largest DMHC-regulated plans during 2008 and 2009. These losses were partially offset by increases in public programs.
  • CDI-regulated plans are becoming increasingly important sources of revenue and revenue growth, as illustrated by Anthem and Blue Shield. Evidence points to an ongoing migration from carriers’ DMHC-regulated products to their CDI-regulated ones, which are generally slimmer, especially in the individual market where economic pressures are strongest.
  • Despite enrollment losses, most plans were profitable in 2009. All of the largest DMHC plans operated in the black, as did almost all of the largest CDI-regulated insurers.
  • Over half of all Medi-Cal and more than one-third of Medicare beneficiaries are enrolled in managed care plans.
  • Large majorities of HMO and PPO members rate their plan highly in terms of getting appointments quickly, finding a doctor, and getting the care they need.

This Almanac report is available from California Health Care Foundation.

Health insurance carriers form the backbone of California’s market-based health care system, serving about two-thirds of the state’s population.
In addition to covering the privately insured, these companies also serve large portions of the publicly insured, through Medi-Cal, Healthy Families, Medicare, and other programs.In California, oversight of health insurance is primarily the responsibility of two entities: the California Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI). DMHC regulates health plans — health maintenance organizations (HMOs) and certain preferred provider organizations (PPOs) — while CDI has jurisdiction over traditional fee-for-service health insurers and most PPOs. Different statutes and regulations govern carriers under the two bodies. Larger companies typically operate a carrier under each regulator, selling products under a common brand name. Drawing on comparable information from both regulators when available, this report gives an overview of market share, enrollment, financial performance, consumer satisfaction, and pay-for-performance participation for California’s health plans and insurers.

Key findings include:

  • Five carriers accounted for three-fourths of the $100.8 billion health insurance revenues in California in 2009.
  • Since 2007, enrollment in both DMHC- and CDI-regulated plans has fallen. The onset of recession may have been a factor in the decline.
  • Individual enrollment fell by 32% and group enrollment fell by 8% in the largest DMHC-regulated plans during 2008 and 2009. These losses were partially offset by increases in public programs.
  • CDI-regulated plans are becoming increasingly important sources of revenue and revenue growth, as illustrated by Anthem and Blue Shield. Evidence points to an ongoing migration from carriers’ DMHC-regulated products to their CDI-regulated ones, which are generally slimmer, especially in the individual market where economic pressures are strongest.
  • Despite enrollment losses, most plans were profitable in 2009. All of the largest DMHC plans operated in the black, as did almost all of the largest CDI-regulated insurers.
  • Over half of all Medi-Cal and more than one-third of Medicare beneficiaries are enrolled in managed care plans.
  • Large majorities of HMO and PPO members rate their plan highly in terms of getting appointments quickly, finding a doctor, and getting the care they need.

This Almanac report is available from California Health Care Foundation.

Brian Schroeder
Brian Schroeder
Brian J Schroeder – Independent Broker - (925) 513-7778