California's Individual and Small Group Markets on the Eve of Reform

Katherine B. Wilson

As health reform presses ahead, California's individual and small group health insurance markets will gain new importance. See profiles of the segments and a new look at small group market share.

April 2011

California's individual and small group health insurance markets serve just under 15% of the state's population — about 5 million people altogether. But under health reform, these market segments will assume importance beyond their numbers. In 2014 new requirements to obtain coverage and financial assistance available through the California Health Benefit Exchange will increase the size of the individual market and offer new purchasing opportunities for many small businesses and their workers. New market rules will change the types of products sold and the way coverage is priced.

This snapshot, a compilation of data from many sources, provides baseline demographics and features of California's individual and small group markets. It also examines the size and attributes of groups, including the uninsured, that may be prompted to seek or shift coverage as health reform is implemented. Some highlights:

  • Of the 2 million Californians who already purchase individual coverage, about 40% would qualify for subsidies and another 18% would be eligible for Medi-Cal if 2014 rules were in effect today.
  • Among the uninsured, 2.8 million (39%) may be newly eligible for Medi-Cal in 2014 based on their income. Another 3.4 million (almost half) of the uninsured may be eligible for subsidies to purchase individual coverage in 2014.
  • Premiums for individual coverage vary by age as much as five-fold. In 2014, health reform rules will limit these differences to a three-to-one ratio, increasing premiums for younger enrollees and reducing them for older ones in many instances.
  • Insurance currently purchased in the individual market provides less comprehensive coverage, paying an average of 55% of medical expenses, compared to 80% to 90% of expenses for group coverage.

The publication is intended to provide background for the policy and program administration decisions that California will face as it moves to implement federal health reform, including the start-up of the exchange.

Health Insurance: Preliminary Analysis of Small Group Market Share (August 2011)

California's small group market provides coverage to an estimated 2.5 million people, about 8% of nonelderly Californians. In 2014, under health reform, small employers will be able to access coverage and, in some instances, subsidies, through the California Health Benefit Exchange (CHBE). CHCF prepared some preliminary estimates of carrier market share to assist policymakers and program administrators, including the CHBE, in planning to serve the small group market.

Both publications are available as Document Downloads.