California won’t extend health plans
Spurning President Obama’s call to let insurers extend canceled health policies, California won’t allow 1 million policyholders to keep their health plan for another year.
The board of the Covered California health exchange voted unanimously to break with the president and keep its requirement that insurers terminate most individual policies Dec. 31 because the policies don’t meet all the requirements of the Affordable Care Act.
Officials acknowledged that their decision won’t satisfy angry consumers and will mean many of them will pay significantly more for new coverage come January. But they worried that allowing widespread renewals could cripple the rollout of the healthcare law in California just as enrollment is picking up steam.
“We know this transition is difficult and some people will be hurt,” Covered California board member Susan Kennedy said. “But delaying the transition won’t solve a single problem. I think it will make a bad situation worse if we complicate it further.”
The state did offer some modest relief for consumers. The exchange will open a special hotline Monday to address policyholders’ questions about cancellations and pushed back the deadline to sign up for January coverage to Dec. 23, about a week later.
State officials pointed out that many policyholders who receive termination notices will get a better deal next year under the healthcare law — either through federal premium subsidies based on their income or new limits on out-of-pocket medical expenses.
But the state estimates that nearly 600,000 customers getting cancellation notices may see higher rates next year.
That’s likely to be the case for Javier Lopez, a self-employed engineer in Huntington Beach. He pays $750 a month for an Anthem Blue Cross plan for his family of four. His premiums may rise nearly 20% next year for a new policy because his current plan is being phased out.
“I’m extremely disappointed” with the state’s decision, Lopez said. “I think the intent of the law was to allow people with insurance to keep it.”
California joined a handful of other Democrat-led states, such as Washington and Minnesota, that have rejected the president’s proposal on cancellations.
Obama’s plan last week came in response to a public uproar over millions of consumers nationwide losing their coverage.
Many consumers were surprised and upset because Obama had repeatedly said people could keep their health plan if they liked it despite the massive healthcare overhaul.
“I think it was a very hard decision for California,” said Timothy Jost, a health-policy expert and law professor at Washington and Lee University in Lexington, Va. “You’d like to make everyone a winner. It’s unfortunately a situation where that can’t happen.”
California Insurance Commissioner Dave Jones scolded the exchange for not heeding Obama’s call and upholding the president’s promise to people.
“It is definitely a rebuke to the president,” Jones said. “Covered California could have honored President Obama’s request without causing damage to the implementation of the Affordable Care Act or the exchange.”
State Republican lawmakers said they will introduce legislation to allow consumers to keep their health plans in 2014.
Most consumer advocates and insurance companies agreed with the exchange’s decision.
They expressed concern about further confusing people who are already struggling to understand how a complex law will affect them.
It’s also likely that insurers would have raised rates midyear on people renewing their coverage. But the increase could come when it’s too late to buy new coverage because enrollment ends March 31.
Exchange officials said consumers would be locked out from new coverage and unable to take advantage of premium subsidies they may qualify for.
“A year extension posed more disruption to the market as a whole, and would be accompanied by a rate increase,” said Anthony Wright, executive director of consumer group Health Access. “So the delay didn’t provide the relief that these consumers sought.”
One of the biggest worries was that widespread renewals of existing policies could keep too many healthy customers out of the new market and lead to higher rates.
Exchanges need a diverse mix of customers to spread out the costs incurred by sicker patients. To address that issue, Covered California had required its 11 participating insurers to terminate most of their existing individual policies Dec. 31.
Covered California said that 79,891 people have enrolled in private health plans through Tuesday, an increase of about 20,000 in the last week.
California’s marketplace has outperformed the troubled federal exchange that serves 36 other states.
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