The standardization that the ACA builds into Covered California including essential health benefits and actuarial values, accomplishes a lot of necessary things to be sure, unfortunately standardization will bottleneck innovation of health plans offered. Covered California will market “catastrophic” health plans to the under-thirty crowd in California. Catastrophic plan means bare-bones health insurance coverage with the emphasis on covering the larger medical expenses. It’s affordable. Which is important to the young men who make up a disproportionate share of the California’s 7 million uninsured.

The feds haven’t gotten around to defining the “catastrophic plan” yet and that could be a good thing. This category could provide room for an “inferior plan”. By that I mean, a young person who is healthy is probably going to buy something very different than somebody who is sick, and it is that notion of providing something probably very inferior to what an employer would buy, but exactly what the individual might need.

Disruptive innovation typically starts at the low end of the market. This segment is less profitable for the incumbents, so there is room for new players to get a foothold. Who might these innovators be? It could be a savvy retailer like Walmart Healthcare or CVS Healthcare. It could be a bank like Wells Fargo Healthcare. More likely it will be an established health plan currently serving the Medicaid or Medicare market. I like the chances of Molina Healthcare, already a known brand in the target market.