California health exchange is hesitant to extend canceled policies
California’s health insurance exchange remained hesitant to embrace a controversial request from President Obama to extend canceled insurance policies for another year.
The state exchange, called Covered California, said Monday that it won’t decide until later this week whether 1 million policyholders with expiring policies can keep their coverage for 2014.
Last week, Obama sought to quell a public and political backlash over cancellation notices nationwide by urging states and insurers to let people stay in their health plans beyond Dec. 31 even if those policies don’t meet all the requirements of the Affordable Care Act.
But the president’s abrupt move has met resistance from some state officials supportive of the healthcare law and the insurance industry for fear that it will undermine the rollout of new government-run exchanges.
Covered California Executive Director Peter Lee on Monday reiterated his concern that extending policies into 2014 could keep too many healthier consumers out of the broader risk pool that will determine future rates. It’s crucial for exchanges to have a solid mix of healthy and sick customers to balance out the costs of medical care across a substantial population.
Rates for 2015 could skyrocket without that cross section of consumers, experts warn. To address that, Covered California required its 11 participating insurance companies to terminate most of their existing individual policies Dec. 31.
A diverse “risk pool is critical to the ongoing viability and the out-of-the-gate viability of exchanges,” Lee said. “California is looking very closely at how we respond to the call from the president. We anticipate making a decision at the end of this week.”
Lee also expressed concern about leaving people in “bad coverage” that doesn’t provide comprehensive benefits required by the healthcare law.
Officials with state-run exchanges in New York and Connecticut say they are still reviewing their options on the cancellation issue. Other states, including Washington, Vermont and Minnesota, have already rejected the idea of extending canceled health coverage.
Meantime, California Insurance Commissioner Dave Jones has repeatedly criticized the exchange for its Dec. 31 cancellation requirement and last week he called on Covered California to lift its contract provision.
A decision for California may come during Covered California’s regularly scheduled board meeting Thursday. One compromise could be allowing insurers to extend old policies until February or March, rather than for a full year. Open enrollment in the exchange runs through March 31.
Jones recently required two health insurers in the state to grant that type of temporary extension to some customers because the companies failed to give them adequate notification of the changes.
It’s routine for policyholders to get annual rate increases, so those may apply to people who extend their coverage as well.
Consumers such as Nazim Karim are urging California to grant them a reprieve.
Karim, 63, a retired accountant in Laguna Niguel, said he wants to keep his current coverage with Kaiser Permanente. He and his wife pay $756 a month for a plan with $2,700 annual deductibles for each of them.
The couple earn just enough that they don’t qualify for any premium subsidies under the healthcare law, so a Bronze-level plan from Kaiser with even bigger deductibles would cost them $1,137 a month.
“It doesn’t make sense to get a jump in premiums and see nothing improve in my plan,” Karim said. “I would be extremely upset if California doesn’t let me keep my current plan.”
Lee said he sympathizes with the plight of consumers getting a big rate hike. “Seeing an increase in price — that is never fun. But we want to make sure consumers know they have choices,” he said.
Before Obama’s recent move, only consumers who purchased individual policies before the healthcare law was enacted in March 2010 had grandfathered status, shielding them from most of the changes under the healthcare overhaul.
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