Californians With Canceled Policies Cannot Renew

Screenshot from CoveredCA.com, the website of Covered California.

Screenshot from CoveredCA.com, the website of Covered California.

After long discussion, the board of Covered California, the state’s health insurance marketplace, voted unanimously Thursday to stay the course and phase out plans that do not comply with the Affordable Care Act by Dec. 31.

The board’s decision comes a week after President Obama said states should consider allowing consumers whose plans were canceled to renew them through 2014. Dave Jones, California’s insurance commissioner, said he agreed with the president’s request.

But ultimately the authority to permit renewals rested with the board –- because of the contracts insurers have with Covered California. The board weighed whether to release carriers from the provision requiring them to phase out plans that do not have the benefits required by the ACA.

The board had three options before it: permit no renewals; permit consumers to renew through Mar. 31, 2014; or permit renewals through Dec. 31, 2014. In a detailed analysis (definitely worth a read), Leesa Tori, senior advisor to Covered California laid out the pros and cons of each, but there was no clear best option. “If we (allow extensions), are we making more of a mess or are we actually helping?” she said.

Numerous consumer advocates and a representative from the California Association of Health Plans spoke in favor of sticking with the original Dec. 31 deadline. While acknowledging that many consumers face dramatic premium increases, many people who addressed the board said that they worried more about adding confusion to an already tumultuous change in the individual health insurance marketplace.

Even Diana Dooley, secretary of California Health and Human Services and member of the board, said she came into the meeting believing she would vote for the three-month extension, out of concern for people whose premiums were going up. “They are Americans, too, and they are Californians, too, and we have an obligation to smooth the edges and lengthen the runway to make smoother landings.”

But ultimately she said she was “persuaded by testimony and the staff’s analysis.”

That analysis included the first estimates of how many Californians whose policies were cancelled are seeing rate increases. To walk through the numbers:

  • 38 million people live in California
  • 5.5 million people are uninsured
  • 2 million people are insured on the individual market — that’s about 6 percent of Californians
  • About 900,000 people have had their policies canceled because they do not comply with the ACA
  • Of those people with canceled policies, 590,000 are not eligible for subsidies
  • About half of those — 295,000 — have “thin” insurance and, even though they’re paying more, will receive more comprehensive coverage
  • Leaving another 295,000 — or less than 1 percent of Californians — paying more, sometimes much more, for roughly comparable coverage

In addition, of those with canceled policies 300,000 of them are eligible for subsidies. One of the drawbacks of allowing renewals was a concern that these people might miss out on the financial help. Even if people could renew, they would likely see a rate increase on their existing policies.

Roughly 5.5 million Californians are uninsured and stand to gain access to health insurance through Covered California.

Darcel Lee, executive director of the California Black Health Network was satisfied the board made the best decision it could. “The board negotiated rates with the plans, all of the details of the plans, months ago,” she said. “To now stop and go backwards, I don’t think that’s what the consumers were looking for. We want to go forward.”

But Insurance Commissioner Jones, a longtime supporter of the ACA, said he was “disappointed” in the board’s decision. “Allowing existing policyholders to keep their health insurance for the duration of 2014 will not undermine the implementation of the ACA, but rather will give consumers more time to figure out what makes sense for their families.”

Enrollment Surging

Consideration of extending policies came against a backdrop of surging enrollment in the Covered California marketplace. As of Nov. 19, nearly 80,000 Californians had completed applications and selected a health plan – the agency’s marker for being formally enrolled. In addition, more than 10,000 Californians per day are now completing applications – although they have not yet selected a health plan. These applications include many people who are eligible for Medi-Cal, California’s version of Medicaid.

New Consumer Help

Covered California staff asked the board to approve several items aimed at helping consumers whose policies were cancelled and are now facing rate increases. These measures include:

  • A slightly later enrollment deadline, Dec. 23 and a later deadline to make the first premium payment, Jan. 5, 2014
  • A dedicated hotline for people who are seeing premium increases to help them understand all their options
  • An additional mailing explaining people’s insurance options on the Covered California marketplace.

Advocates have been worried that some people were receiving mailed notices of cancellation and, in the same mailing, information about the new plan their carrier would enroll them in. Covered California wants to be sure people are aware of all their options. “That special customer service line” can help people compare apples to apples, Tori said. “We want people to understand that value proposition and understand what they’re getting.”

 

Original Post:

SACRAMENTO (AP) — The board overseeing California’s health insurance exchange has voted to stick with its current approach of phasing out by year’s end health insurance policies that do not meet current benefit requirements.

The Covered California Board of Directors voted 5-0 Thursday to hold steady on its current approach, defying President Barack Obama’s recent flip on one crucial aspect of the Affordable Care Act.

The state insurance commissioner had said that 1.1 million Californians are receiving notices that their current individual health insurance policies will be discontinued in 2014 because they do not meet the benefit requirements of the federal health care overhaul.

That has angered some policy holders, many of whom will see their monthly premiums and deductibles rise sharply with the new plans being offered. It also flies in the face of promises Obama made repeatedly when he said people who liked their current health insurance policies could keep them under his health insurance reforms.

The president has since backtracked and has asked states to allow insurance companies to extend those older policies.

But many insurance companies oppose that, saying doing so would undermine the new markets being set up under Obama’s law. They also said they did not have enough time to rebuild policies they already had discontinued.

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