State lawmaker sues California health exchange over cancellations

Covered California health exchange is sued by a Republican lawmaker over last year's policy cancellations. Above, Exchange Director Peter Lee discusses enrollment in January.
(Rick Loomis / Los Angeles Times)

A Republican state lawmaker sued California’s health insurance exchange, saying it overstepped its authority by refusing to allow more than 900,000 people to keep their existing health policies.

In his suit, state Sen. Ted Gaines (R-Rocklin) said the Covered California exchange violated federal and state laws by requiring participating health plans to cancel policies by Dec. 31 that didn’t comply with new requirements of the Affordable Care Act.

The issue of cancellations for about 900,000 individual policyholders in California and several million nationwide has sparked widespread criticism of President Obama’s healthcare law.


Many consumers got new, improved coverage at lower rates as a result of federal premium subsidies. But other people who received cancellation notices complained about paying higher premiums on their new plans and losing access to their regular doctors and hospitals.

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“This lawsuit stands with consumers and puts a stop to this unchecked government abuse,” Gaines said in a statement Wednesday.

The lawsuit was filed in Los Angeles County Superior Court.

A spokeswoman for Covered California said the exchange hadn’t been served with the lawsuit yet and couldn’t comment.

Also Wednesday, the Obama administration announced that some Americans with older health plans will be allowed to keep their plans into 2017. But that extension won’t apply in California without a change in state law, according to Covered California.

California’s exchange board voted in November against granting an extension for non-compliant policies. About half the states nationwide took a similar stance.

Anne Gonzales, a spokeswoman for Covered California, said newly enacted state law doesn’t permit the renewal of non-compliant policies after Jan. 1, 2014.

Gaines is running for state insurance commissioner. The Democratic incumbent, Dave Jones, has also been sharply critical of Covered California’s position on cancellations and asked it to reconsider last fall.

Open enrollment for individual policies ends March 31.

Gaines also criticized how Covered California has spent millions of dollars on marketing to potential enrollees.


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