Why did Anthem Insurance leave Santa Barbara?

In August, Anthem announced it was pulling out of the individual insurance market in California, potentially leaving 17,000 people in Santa Barbara county without health care. It was disappointing news for many, but also confusing news.

Retired software engineer David Swanson, 58, used to get his insurance through his work, but went with Anthem after retirement because his current income fluctuates. Like many others, he received his letter in the mail from Anthem saying that as of January 1, 2018, he would no longer be insured. Which led him to ask Curious Coast this question:

“Why did Anthem pull out? And what’s next? I believe Blue Shield is an option, but will it be the only option?” – David Swanson

For answers, I turned to Dave Peters of Peters & Milam Insurance Services. It’s one of many businesses in town that help people navigate the often confusing world of insurance. They take a small commission from whatever plan a user chooses, so they remain objective. (Full disclosure: I’ve used them in the past when I first started working as a freelancer.)

Dave Peters of Peters & Milam Insurance: “I feel (Anthem) let my consumers down a little bit.” Photo: Ted Mills

“We didn’t see Anthem dropping out,” Peters said. “We thought they’d be committed to the people of California. They’re a publicly traded company, and they have to answer to their shareholders, but I feel they let my consumers down a little bit.”

Who is not affected:

  • Small and large group plans, offered through an employer
  • Those on Medi-Cal or Medicare
  • Those who already had Anthem before the ACA and were grandfathered in

Who is affected:

  • Anyone on Anthem’s Bronze, Silver, Gold, and Platinum individual plans who joined through Covered California

So what happened?

Anthem’s president Brian Ternam released a statement lauding their seven years offering individual plans, “But the market for these plans has become unstable. And with federal rules and guidance changing, it’s no longer possible for us to offer some of those plans.”

One reason, Peters said, is the high cost of upcoming medicines about to hit the market that Anthem knew they’d be covering.

But the main reason is the potential end of Cost-Sharing Reductions, aka CSRs. President Trump signed an executive order ending them. Immediately afterward, 18 states sued the administration to keep them funded. CSRs are additional Federal subsidies that go to low income folks, offering enhanced benefits, lower deductibles, lower copays, and lower out of pocket maximums. Insurance companies say that without the CSRs, the business isn’t worth it.

So what about Blue Shield?

That leaves Blue Shield as the only individual market insurer in Santa Barbara for 2018. 

The good news for low-income folks with a Bronze plan on Anthem is that Blue Shield’s similar plan will probably be around the same price. However, for those on the Silver plans, one tier up, they could see their rates go up 12 percent to cover the CSRs that the company might lose.

The Sansum Problem

Another concern is what will happen to the 7,000 Santa Barbara County residents who use Sansum Clinic, one of the largest health care providers in the county. For years, Anthem has contracted with Sansum, but now they’re leaving. Blue Shield has never contracted with Sansum, and is still negotiating with the clinic. But with enrollment opening in a week and 2018 approaching, people are concerned.

Jill Fonte, Sansum’s public information officer, could not give a date but said “We hope to have resolution on this… I am certain we’ll share this far and wide when we have a solution.”

Additionally, Governor Brown recently signed SB 133, which allows certain patients–like those undergoing extensive chemotherapy treatments or with similar ailments–to continue seeing their doctor for up to a year, even if they’re not under the new insurance plans. The state would foot the bill.

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