Amid an uproar over widespread cancellations of health insurance policies, Anthem Blue Cross of California said it is granting a two-month extension through February to 104,000 customers.
California’s largest for-profit insurer is offering more time to a small portion of its canceled policyholders because the insurance giant didn’t send termination notices in time under state rules.
This move comes at a time when an estimated 1 million Californians and several million more nationwide stand to lose their existing health insurance at the end of the year because it doesn’t meet all the requirements of the Affordable Care Act.
Under the healthcare law, these consumers are guaranteed replacement coverage regardless of their medical history, and some may qualify for federal premium subsidies. Still, many people resent being required to switch — and possibly pay more — after President Obama repeatedly told Americans that they could keep their health plan if they liked it.
In response to that backlash, Obama apologized last week to those affected consumers and he said his administration is looking into potential fixes for the situation.
Meantime, at the state level, the California Department of Insurance has been reviewing insurance companies’ termination letters to ensure customers were given adequate warning.
Last week, state Insurance Commissioner Dave Jones used the threat of a lawsuit to make Blue Shield of California grant a three-month extension to about 113,000 individual customers. Jones said Blue Shield failed to give the required 180-day notice to that group of policyholders.
Jones is scheduled to make a formal announcement Tuesday on this extension by Anthem, a unit of WellPoint Inc., the nation’s second-largest health insurer. A spokesman for Anthem also declined to comment further until Tuesday.
Anthem confirmed that it discovered a delay in its customer mailings that had caused it to miss the 90-day notice, required by the state, for these 104,000 people. However, a large majority of Anthem’s canceled policyholders are still scheduled to lose their current coverage Dec. 31, and they face having to find another plan.
The insurer has declined to specify how many of its individual policies are being terminated in California. More than 400,000 people could be losing coverage through Anthem, according to some industry estimates.
People who bought their individual coverage before March 2010, when the healthcare law was enacted, and kept it in place have “grandfathered” policies. They aren’t required to make the shift to more comprehensive coverage under the Affordable Care Act.
Last week, two longtime Anthem policyholders sued the company in Los Angeles state court, saying they were pressured into giving up their grandfathered status in 2011 without being told the consequences. Anthem has declined to comment on those allegations.
Open enrollment in California’s health insurance exchange, Covered California, runs through March 31. People who want coverage Jan. 1 must pick a health plan by Dec. 15.
Anthony Wright, executive director of Health Access California, a consumer advocacy group, said consumers deserve extra time on their policies if their insurer didn’t follow the rules. But he said taking a short-term extension may not be in their best interest, so they should carefully review their options.
It might be smarter, he said, to sign up for a cheaper or more comprehensive policy as soon as possible.
“There are likely better and cheaper options, as well as premium subsidies, in the state exchange,” Wright said.
Under the healthcare law, many people will qualify for federal subsidies that make coverage more affordable, or they may be eligible for an expansion of Medi-Cal, the state’s Medicaid program for the poor.
Despite that financial help, Covered California estimates that nearly 600,000 of the 1 million Californians getting cancellation notices may pay higher rates next year for individual policies with improved coverage.
In addition to higher premiums, some consumers are worried about moving to a health plan that doesn’t include their preferred doctors and hospitals. Many insurers have sharply limited their medical networks for new policies next year to help hold down the premiums.