PacAdvantage, the non-profit voluntary purchasing pool created by the state in 1992 to provide choice and affordability of coverage to firms with 2 to 50 employees, will discontinue offering health insurance coverage at the end of 2006 in part due to shrinking participation by the state’s major health plans. Although the state plans to smoothly transition PacAdvantage enrollees to new health plans, the pool’s closure will substantially alter the landscape of health coverage in California.
Effective immediately, PacAdvantage will cease enrollment of new groups. Existing coverage for all current enrollees will terminate on December 31. Providing coverage services for some of the affected enrollees, Kaiser Permanente has recently announced that it will offer coverage for the 67,000 PacAdvantage enrollees currently with its plan. In addition, CaliforniaChoice, another health insurance pool for small businesses, will continue to operate, offering plans that include Kaiser, Blue Shield and Health Net, Western Health Advantage, Universal Care, and Sharp.
Of the 10 plans originally participating in PacAdvantage, only 3 were providing coverage this year. Of those, Blue Shield of California, recently pulled out of the program citing financial losses. Blue Shield’s departure left 116,000 enrollees with fewer healthcare options and a choice between only two remaining carriers – Kaiser Permanente and Health Net of California. Although the parties attempted to negotiate terms that would prompt Blue Shield to participate, a financially acceptable arrangement could not be made. Since choice is one of the hallmarks of the PacAdvantage plan, the withdrawal of Blue Shield left too few competitive options for employer groups and their employees.
Although some health advocacy groups view the PacAdvantage closure as a major setback for both consumers and employers, PacAdvantage has urged the state to focus on the program’s thirteen years of success and on how PacAdvantage can serve as a model for investing choice in healthcare. “Not only have we offered high quality health plan choices to thousands of Californians,” comments PacAdvantage Board Chair Michele French in the program’s August press release, “PacAdvantage has also pioneered tools that let people compare health plan coverage, costs and quality based on their own needs, and which are now used by millions of people in California and across the nation.”
For more information on PacAdvantage, visit www.pacadvantage.org. To learn more about other health coverage strategies used in California—and around the country—visit the State Coverage Initiatives Coverage Matrix at www.statecoverage.net.
