Speak with a Covered California certified agent! Call (888) 413-3164 or Shop Online Now

Shop and Compare

California Health Insurance Plans and Rates

It's easy. Just enter your zip code.

Covered California News & Commentary

Topics of interest to both consumers and agents related to Covered California and the ACA biased in favor of the successful implementation of the Exchange and deliberately apolitical.


March 2012 Archives


In a few days, the U.S. Supreme Court will hear oral arguments on the constitutionality of the individual mandate that requires all individuals who can afford it to buy health insurance. Employers and brokers are awaiting the Court’s decision (late June 2012) on the individual mandate and how much of the law will survive if that provision is found unconstitutional. Here’s an outline of different outcome scenarios and how it affects employers and advisers alike.

Scenario 2: The individual mandate is found unconstitutional and the rest of the ACA is upheld

If the individual mandate is struck down but the rest of the Affordable Care Act remains, it could have disastrous effects on the health insurance marketplace. Some states, most notably New York and New Jersey, tried to implement these insurance market reforms without an individual mandate, and the insurance market went into a death spiral of ever increasing health insurance rates as the risk pool became sicker while the healthy wait to purchase insurance only when they get sick.

Other mechanisms could be substituted for the mandate like limited open enrollment periods, penalties, longer contracts and deadlines could be used to incentivize individuals to purchase insurance before they get sick. A late enrollment fee similar to the Medicare Part D Program that acts to encourage individuals to join when they can and not delay until they need it because they may not be able to get in for another year at that point.

However, Congress would have to find enough common ground to enact new legislation to counter the adverse selection threat. In an election year, that seems unlikely. If new federal legislation is not in the cards, the decision of how to increase insurance access would move to the states. California has plenty of legislative appetite for pushing health care reform and it seems certain that lawmakers here would quickly remedy Washington’e failure to act.

The structure of the exchanges and the fact that the subsidies are only available to individuals makes it advantageous from a financial perspective for employers to drop group coverage. “I’m off the hook.” will become a commonly heard refrain among many small business owners. Other employers who need to be competitive in hiring and retaining their workforce may find offering a comprehensive health care plan is required in that particular industry and workplace demographics and are not going to be able to walk away from coverage.

We believe that California brokers’ ability to thrive in the market depends on their involvement with the California Health Benefit Exchange. We are optimistic that brokers will play an integral role in the Exchange. There will be a model that works for brokers. And just like travel agents, some fade out over time, and new businesses will be born that work.


In a few days, the U.S. Supreme Court will hear oral arguments on the constitutionality of the individual mandate that requires all individuals who can afford it to buy health insurance. Employers and brokers are awaiting the Court’s decision (late June 2012) on the individual mandate and how much of the law will survive if that provision is found unconstitutional. Here’s an outline of different outcome scenarios and how it affects employers and advisers alike.

Scenario 1: The individual mandate is found constitutional and all of the ACA is upheld.

The main question would be whether employers stay in the game, rather than pay to have their employees enter the state-run exchanges - a question answered that may be answered by simple math. We believe that there is a clear advantage to stop sponsoring health care and send employees to the exchanges once they are set up. Employer penalties are so low that it looks like a no-brainer. However, if you’re in a competitive industry and your competitors are going to continue to provide health care, you’re going to need to make your employees whole with some form of additional compensation. Premiums will increase in the individual and small group market because of the change in how rates are calculated under ACA. Instead of basing an individual or group rate on age or health status, in 2014 these rate determinations narrow. So even if employers continue to offer coverage, they will need to shift costs, whether that is in the form of increased employee cost-sharing or major budget and personnel changes.


New federal health insurance regulations released yesterday by HHS, provide clarification for the role of brokers in the Exchange. Brokers will be allowed to direct people to state insurance exchanges and check to see if they are qualified for tax credits or premium subsidies.

This confirms a new business model for insurance brokers looking to set up web-based access points to the state insurance exchanges. Eligibility for determining the premium tax credit is going to be done by the Exchange, but a web-based broker will be allowed to interact with consumers on the Exchange in an automated way.

The federal government will not regulate how insurance brokers charge and collect fees. How brokers will be compensated for bringing business to the exchange will be regulated at the state level. Some liberal-leaning states and groups did not want brokers assisting the low-income people who will qualify for government subsidies, because the brokers’ fee could increase the cost of premiums.

The regulation received a warm welcome from the pro-health reform community, but other industry groups gave the regulations a cautious welcome. “This rule recognizes that states are in the best position to establish exchanges because they have the experience and local-market knowledge needed to best meet consumers’ needs,” said America’s Health Insurance Plans CEO Karen Ignani. She said AHIP would need to continue to review the regulations.

Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU) said, “The devil - as ever - will be in the details, and we will have a lot to read…On the surface, we are encouraged by the rule’s focus on flexibility.”


The CBIA Health Connections private sector exchange is nationally recognized as a successful small business exchange. Ken Comeau, who is VP Products & Services with CIBA, shared some of the lessons learned when he participated in a forum on how to best implement the SHOP Exchange in California sponsored by The California Endowment and the California Small Business Majority on November 16, 2011. We have gathered some of Mr.Comeau’s comments here.

On Standardization “The plans offered through CBIA are standardized. CBIA, not the insurers, designs the products. In order to avoid adverse selection, CBIA offers four carriers, 11 standardized benefit levels plus four HSA plans for a total of 48 plan choices. This allows significant employee choice. With standardized benefits, carriers have to find other ways to stand out other than plan design.”

On Ease of Use “Services that make the exchange easy to use are crucial. Many have compared using the exchange to booking an airline ticket online. That is a mistake. Making travel plans is fun; buying insurance is not. That is why CBIA works hard to make the complex and time-consuming tasks of buying, selling and administering insurance easy. For instance, CBIA, which sells entirely through brokers, pays the broker commissions and transmits all premium payments to the carriers. CBIA has also made sure brokers can manage their business from the CBIA website. All their information is in one easy-to-access location.”

On Navigators Navigators’ key role will be reaching under-served populations. Agents and brokers have training and licensing to ensure they are knowledgeable about health insurance. It is critical that navigators have similar training to ensure they are providing valuable assistance to underserved people—many of whom will be purchasing health insurance for the first time.”

Do You Have California Health Insurance Questions?

Ask An Expert

View Previous Questions
Call Us at (888) 413-3164


© 2019 California Health Benefit Advisers, LLC
Home / About / Start Shopping / Ask a Question

“Covered California,” “California Health Benefit Exchange”, and the Covered California Logo are registered trademarks or service marks of Covered California, in the United States. This web site is owned and maintained by California Health Benefit Advisers, LLC, which is solely responsible for its content.