SACRAMENTO -- Small nonprofits offering insurance plans on California's health care exchange are lagging well behind major insurers in sign-ups, potentially undermining a key goal of the federal Affordable Care Act, which sought to drive down costs by increasing competition.
Across the U.S., nonprofits and co-op insurers have struggled with a lack of brand recognition and, in some cases, offering policies that were priced to compete with the big insurance companies.
California does not have co-op insurers, which are owned by plan holders and backed by federal loans, but it does have seven regional insurers linked to nonprofits and public programs competing on the Covered California exchange.
Those nonprofits accounted for less than 5 percent of the 880,000 enrollments on the state's health insurance exchange by the end of February, the most recent figures made available that break down enrollment by insurer. Since then, sign-ups have topped 1.2 million.
Four large national insurers dominate the market: Kaiser Permanente, Anthem Blue Cross, Blue Shield of California and Health Net.
With open enrollment nearly over in the state, the small insurers are looking beyond the sign-up figures to determine whether the exchanges will be financially viable for them.
San Francisco-based Chinese Community Health Plan appeals to the city's sizable Chinese-speaking population with employees and materials tailored to their language and including familiar health centers in its network.
Competing on the state's Covered California exchange provided an opportunity to attract new customers with the HMO's low sticker price after losing other policyholders to competitors and expanded Medicaid eligibility. Larry Loo, the plan's business development and operations director, says his organization received 12,000 applications, double its target, and has retained about 80 percent of existing members, just shy of its 85 percent goal.
He calls the plan's performance "OK" and says it is focused on the next step of paying out claims and complying with federal regulations.
"We are like a rounding error for a lot of these big health plans," Loo said. "The risk is really scaling up for all the complexities that come with the exchange business."
Sharp Health Plan, owned by a San Diego regional health care provider, has received about 10,000 applications, or a 10 percent share of the area market, in its first foray into the individual market.
CEO Melissa Hayden-Cook said the financial viability of competing on the Covered California health exchange will not be clear until months after the first year people have policies.
"It takes time to know how the business model is going to perform," she said. "But with federal protection to help offset some of those risks, we're cautiously optimistic."