California’s insurance commissioner says insurance companies and the state Obamacare marketplace are at fault in causing cancellation of almost a million health insurance policies.
The commissioner, Dave Jones (pictured), has pressed Blue Shield of California into extending coverage for as many as 119,000 clients until the end of the first quarter of 2014. They are among the more than a million Californians with existing individual insurance policies that do not meet the Affordable Care Act’s essential health benefits standard, as it’s applied in California.
Jones said, however, that he was not able to force other insurance companies to offer the extensions. The Blue Shield policies were the exception because in that case inadequate notice was given customers.
“I don’t think, short of other legal violations, that (competing) health insurers will give people more time,” Jones said in announcing the Blue Shield delays Nov. 5.
Kaiser Permanente notified about 160,000 of its subscribers that their policies would have to change. Health Net’s notices numbered about 75,000.
If all of the Blue Shield policyholders elected to stay in their existing plans until March 31, the total premium savings could be as high as $28.6 million, Jones said.
“I disagreed with health insurers’ decision to cancel policies and Covered California’s decision to require health insurers selling in the Exchange to cancel existing policies on December 31,” Jones added. “Health insurers and Covered California are allowing small businesses to renew their existing plans past Dec. 31 and should have allowed individuals and families to do the same.”
Jones noted that he is supporter of Covered California and the Affordable Care Act.
The cancellations — more accurately notices that new policies are needed — affect a distinct minority of Californians. The majority get their health care coverage via employer plans, Medi-Cal or Medicare. About 1.86 million state residents are individually insured, while 16 million have employer-generated insurance.
Increases in premiums are estimated at 30 percent for California buyers of individual insurance who are not eligible for Obamacare subsidies. Premiums increased at a steady rate in the years before Obamacare, of course, with the state and feds stepping in to fight some increases.
The limited number of individual police extensions created yet more controversy for the Obamacare transition:
“If Blue Shield policyholders are getting 90 days more to shop for new policies, why shouldn’t all policyholders?” said Jamie Court, president of the nonprofit group Consumer Watchdog. “It’s only fair given the (California) exchange’s computer glitches and slow enrollment process to give consumers more time to find policies that are more affordable and include their own doctors.”
Blue Shield warned that the extension could lead to customers facing double deductible limits and missing out on subsidies available via Covered California, the Obamacare marketplace for individual and small-business health insurance.
The California Association of Health Plans warned consumers to “carefully weigh the potential costs of delaying enrollment.”
“A short extension at this late date only muddles the process and poses potential negative cost impacts for customers,” CAHP chief Patrick Johnston said. “Under the (Affordable Care Act), individual health insurance must convert to more robust and predictable coverage. This three-month delay does nothing to change that reality.”
Jones, the insurance commissioner, said: “The existing policies are likely to have a broader network of medical providers and for those who are not eligible for premium subsidies, a lower cost than what is available in 2014.”
Still, the Department of Insurance advised: “Policyholders who are eligible for federal premium subsidies through Covered California will likely want to select their new policies by Dec. 15.”
People who bought their individual health insurance policies before March 2010 aren’t included in the cancellations because those policies are “grandfathered in.”
President Obama recently addressed the insurance policy hikes: “Remember, before the Affordable Care Act, these bad-apple insurers had free rein every single year to limit the care that you received, or used minor pre-existing conditions to jack up your premiums, or bill you into bankruptcy.”
Media reports of high premium increases have been plentiful since the notices went out. While some of these claims are legitimate, others don’t hold up to comparison shopping via the Covered California web site.
The L.A. Times somehow found merit in the case of a lawyer who protested her increase from $98 a month to $238. “It doesn’t seem right to make the middle class pay so much more in order to give health insurance to everybody else,” the lawyer complained.
Premiums north of $1,200 weren’t unusual for individuals before the Affordable Care Act, with the elimination of penalties for pre-existing conditions leveling the playing field. “I feel that we are on the right side of the scales,” Covered California chief Peter Lee has said.
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