Health insurance giant Anthem Blue Cross said it won’t participate in California’s new insurance market for small businesses.
Anthem, a unit of WellPoint Inc., is California’s largest insurer for small employers. This surprising move could hamper the state’s ability to enroll businesses in its new exchange called Covered California that opens Jan. 1 as part of the federal healthcare law.
Instead, Anthem said it will keep selling coverage to small firms outside the exchange in direct competition with the state-run market. Anthem also remains one of 13 health insurers that will offer policies to individuals in Covered California.
This development isn’t a propitious one for the California Small Business Health Options Program (SHOP) exchange marketplace. Not having a payer with such a significant market share could make it harder for the SHOP to attract small employers. Unlike the individual exchange marketplace, the SHOP relies almost completely on market aggregation forces to improve affordability, competition and choice in this market segment. Covered California is expected to announce participating SHOP plans for 2014 early next month.
In 2011, the California HealthCare Foundation estimated Anthem Blue Cross had 22 percent of the Golden State’s small group market, covering 548,000 enrollees.
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