California’s Health Exchange Spurns Obama Directive

Published on

SACRAMENTO — It's all systems go for the federal health care law, at least in California, after the state on Thursday spurned President Barack Obama's directive that would allow millions of Americans to extend their current health insurance policies through 2014.

The five-member board of Covered California, the state's health insurance exchange, voted unanimously to stay the course and continue building on the exchange's momentum of successfully enrolling tens of thousands of people in new health care plans.

The board agreed that extending the deadline to a million individual policy holders whose plans are being canceled offers no benefit to the consumer and may create confusion about accessing affordable health care coverage through Covered California.

"Delaying the transition will not solve a single problem. It will just make it more difficult and confusing,'' said board member Susan Kennedy. "Delaying will only make a bad situation worse.''

The stunning vote relieved many state legislators and others who had supported Obama's signature legislation, as well as the four major insurance companies participating on the exchange. Those firms, which stood to lose millions if they had been forced to extend their 2013 plans, possibly at the same rates, are now assured that about 75 percent of those individual plans will end on Dec. 31.

As Charles Bacchi, executive vice president of the California Association of Health Plans, had noted earlier during Thursday's meeting, the transition for these individual policyholders whose plans don't comply with the new law was going to happen, one way or another.

"Changes are coming for these individuals, whether it's today or next year,'' he said.

Leaders of the state's Senate and Assembly praised the decision.

Assembly Speaker John Perez, D-Los Angeles, called it "the right thing to do.'' He said the vote "sends a powerful signal to the rest of the nation since California is leading in the implementation of the Affordable Care Act.''

Senate President Pro Tem Darrell Steinberg also called it an appropriate decision.

"To its credit, California is well ahead of the rest of the country in implementing the Affordable Care Act, with several competitive plans and a working website that's enrolling more than 10,000 people every day,'' he said.

But the vote infuriated many others, including consumer activists working on behalf of the California residents who had hoped to ride on Obama's recommendation last week that could have left their plans in place for another year.

"Shame on them,'' said Jamie Court, president of Santa Monica-based Consumer Watchdog.

"It's outrageous that this board would acknowledge that half of cancelled policyholders will have rate hikes, then block them from continuing their coverage for another year,'' he said. "Covered California showed they represent the insurance companies, not the policyholders, by standing in the way of President Obama's call for action.''

Insurance Commissioner Dave Jones was equally frustrated by the board's move. For weeks, he has pushed the board and insurers to give the policyholders a break. Already this month, his office has managed to extend the policies of about 200,000 customers to either the end of February or March after two insurance companies, Anthem Blue Cross and Blue Shield of California failed to give their customers enough warning that their policies were being canceled.

"Covered California's decision is a disservice to California consumers," Jones said during a press conference Thursday afternoon. "They're losing their doctors and hospitals, and in some cases, they're being steered to policies with lower benefits.

"This is a definite rebuke to the president," he added.

Jones also rebuffed arguments made by health care experts that allowing policy extensions would somehow hurt the state's exchange, calling that claim "disingenuous."

The board, he added, could have honored President Obama's request without causing damage to the implementation of the Affordable Care Act or the exchange.

But that line of reasoning proved unconvincing to the board, which before its decision Thursday was presented with the first demographic data related to the enrollment of 30,830 people who signed up for a health care plan under the state exchange through Oct. 31.

And the data shows that 18-34 year olds — often dubbed the "young invincibles" — are applying for insurance in direct proportion to California's population.

Because California is considered a bellwhether for the success of the new health law, the announcement by Peter Lee, the exchange's executive director, was the first encouraging news for the law's supporters in weeks after the disastrous launch of the federal website and revelations that insurers are canceling the policies of millions of people across the U.S. who have health plans that don't conform to the new law.

"The good news is that young people 18 to 34 are enrolling for coverage at the same rate as the population,'' said Lee, because the success of the exchange over the long term is about having a large number of young, healthy people to subsidize the older, sicker people.

Of the 30,830 individuals who enrolled during October, 22.5 percent, or about 6,900 people, were between 18 and 34 years old. This group makes up about 21 percent of the state's population.

The board's vote Thursday was a step toward resolving a controversy that has erupted not only in California but nationwide over the cancellation of individual health plans, many of which are cheaper but don't offer all the benefits required by Obama's signature health care law.

Last week, in an effort to douse the firestorm, Obama issued a directive allowing insurers to renew those individual policies in 2014. But the announcement included a few caveats: state insurance commissioners must give their blessing to the directive, and the insurance companies also have to agree to continue providing health coverage through 2014.

While California's insurance commissioner has urged the exchange and insurers to let that happen, both were concerned about the implications of Obama's directive. They worried that following the president's recommendation would mean that hundreds of thousands of younger and healthier people will be taken out of the insurance exchange's "risk pool," which would drive up insurers' costs.

Covered California's enrollment rate during the first week of October showed that about 700 people a day selected a health plan. That rate nearly quadrupled by the second week of November to about 2,700 plan selections per day.

In October, Los Angeles County had the largest number of enrollments, totaling 6,978. San Diego County and Orange County followed closely. In Santa Clara County, the total was 1,472, or 4.8 percent of the total.

English was by far the predominant language of those who enrolled during October.

Covered California said it anticipates a more diverse language mix in the coming months with greater in-person enrollment as "language specific" outreach and marketing rolls out later this month and December.

Lee noted that by Nov. 16, the total enrollment figure jumped to 79,800.

The board on Thursday also agreed to extend the deadline for enrollment for coverage that would take effect on Jan. 1 from Dec. 15 to Dec. 23 and extend the deadline for payments due from Dec. 26 to Jan. 5.

Contact Tracy Seipel at 408-920-5343. Follow her at

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases