In October 2015, Santa Cruz Sentinel reported: “Santa Cruz County has the highest cost for employer-provided health insurance of 274 U.S. metro areas, according to a study by a consumer nonprofit in New York that concludes the reason is lack of competition.”
Well, this lack of competition is about to end! On April 19, 2016, Kaiser Permanente announced that they will be coming to Santa Cruz County, effective January 1, 2017.
How did Santa Cruz become one of the highest rated metro areas?
As a result of the implementation of the Affordable Care Act in 2014, the realignment of rating areas in California put Santa Cruz County in one of the highest rating areas in the state.
If you review the Explanation of Benefits from your health insurer, you will see that some of the large regional clinics and hospitals in Santa Cruz have had the leverage to negotiate reimbursement rates that vary little from their retail charges. This results in both higher premiums and higher out-of-pocket costs when accessing medical services.
Where does Kaiser Permanente come into play?
By January, Kaiser Permanente will open three clinics throughout the county, located in Santa Cruz, Watsonville and Scotts Valley. They will also offer local hospital services and inpatient care at Watsonville Community Hospital and members will have the option to use other regional Kaiser Medical Centers in Santa Clara and San Jose. A fourth mid-county location is planned for the future.
Historically, Kaiser’s presence in a community has resulted in cost competition and access to lower cost plans. This is in keeping with their mission statement: “To provide high-quality, affordable health care services and improve the health of our members and the communities we serve.”
Will this fix the larger rating challenge for employers?
Potentially. As a seasoned broker in this community, my clients have consistently questioned why Kaiser has not been available here in Santa Cruz County. Now, having access to Kaiser in our community will add a viable option for employers and employees. For some groups, Kaiser will be a welcome option; for others, Kaiser may not be a good fit. Regardless, the greatest impacts will be the availability of a competitive, comprehensive medical benefit option in our county and the promise of creating a more competitive cost environment in the future.
For large group employers (100+ full-time equivalent employees), Kaiser quotes are available now for a January 1, 2017 effective date. For small groups (less than 100 eligible employees), rates will be available October 1, 2016, for a January 1, 2017 effective date.
Digital looks forward to helping employers and employees navigate this exciting new option for Santa Cruz County. For more information, contact your trusted advisors or Digital representative today.