California health exchange still debating what to do on cancellations

After President Obama threw the door open to extending canceled health policies, California’s health insurance exchange remains noncommittal on what that will mean for 1 million residents who are losing their existing coverage Dec. 31.

Covered California, the state exchange, said Thursday “we are assessing the impact and analyzing our options on how Covered California will incorporate this modification into our existing policy and direction.”

The exchange added that it “understands the urgent need for clarity around this segment of policy and is working closely with health plans, regulators, and policymakers to quickly determine how the president’s new guidance will be fulfilled for Californians.”

The exchange’s decision will be crucial for hundreds of thousands of Californians affected by termination notices on their individual policies in recent weeks.

In California, the cancellation notices were prompted by a state exchange requirement on its 11 participating insurers that all current policies end Dec. 31.

The one exception under the healthcare law has been individual policies that were in effect before the law was enacted in March 2010. Nearly half of the people in California’s individual market have those “grandfathered” policies.

Exchange officials have said they set the Dec. 31 requirement because they didn’t want to give insurance companies the opportunity to hold onto their healthier customers for most of 2014, keeping them out of the larger risk pool that will dictate future rates.

Some California insurers lobbied for that requirement as well, so companies were following the same rules.

But California Insurance Commissioner Dave Jones has criticized the exchange for imposing the year-end deadline and has called on Covered California to allow renewals into 2014. Jones is scheduled to address the issue again at a news conference later Thursday.

Major insurers in the state are weighing the potential impact on rates and other issues if widespread extensions for individual policyholders are permitted.

Insurers also complain about the administrative burden of notifying customers about these changes in such a short amount of time and clearing other regulatory hurdles.

Steve Shivinsky, a spokesman for Blue Shield of California, said the nonprofit insurer “will work with state regulators, public officials and Covered California to understand the implications of today’s announcement. We remain firmly committed to the goal of providing access to high-quality, affordable healthcare for all Californians.”

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