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California Health Insurance Plans and Rates

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Active Purchaser

Selective Contracting with Health Plans

The Affordable Care Act (ACA) purposely gives states flexibility to craft their own insurance exchanges. California took advantage of the flexibility in the federal health reform law to create an Exchange that will function as an active purchaser in the marketplace. That means, the California Health Benefit Exchange can selectively contract with specific insurance carriers and exclude others as long as criteria for selection are consistent with seeking to promote “optimal combination of choice, value, quality, and service”.

In Good Standing

The ACA requires the Exchange to certify only Qualified Health Plans (QHP) offered by issuers that are “licensed and in good standing” to offer health insurance/coverage in California. In collaboration with California regulators, the Exchange has compiled a list of requirements which an issuer must meet in order to be declared as “in good standing” including:

  • Benefit plan design requirements are met for state mandates and essential health benefits
  • Provider network adequacy and accessibility requirements are met.
  • Compliant with claims payment practices, utilization review policies, medical loss ratio, etc.
  • Financial solvency and reserves.
  • Sufficient administrative and organizational capacity.

Additional ACA Requirements

Further, the regulator will verify that the QHP bid has met specified core ACA requirements such as:

  • Verify that the issuer’s underwriting complies with allowable rating factors.
  • Verify the reported actuarial value is accurate.
  • Complete premium rate review and make finding of reasonableness.
  • Assure segregation of funds for coverage of abortion services for which federal funding is prohibited.

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