Covered California Blocks Obama’s Plan to Delay Cancellations, Rate Hikes for 50% of Cancelled Californians

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Santa Monica, CA – Leaders of California's health insurance marketplace today voted to block a reprieve on health insurance cancellations proposed by President Obama last week and to allow health insurance companies to hike rates on 50% of cancelled Californians. The move shows the need for regulation of health insurance prices in California, a reform voters will have the chance to enact through a ballot initiative on the November 2014 ballot, said Consumer Watchdog.

Data released by Covered California revealed that fifty percent of Californians who received cancellation notices for their existing health insurance plans, approximately 450,000 people, will face higher rates on January 1. See this link for Covered California's data:

"Covered California today showed why we need elected officials, accountable directly to the public, to oversee how much health insurance companies charge.  It's outrageous that this board would acknowledge that half the Californians facing cancellations will pay more money, then block them from continuing their existing policies for another year.  Shame on Covered California for representing the insurance companies, not the policyholders, and standing in the way of President Obama's call for relief," said Jamie Court, president of Consumer Watchdog.

In a state without any protections against rate hikes, unlike states like Washington and Minnesota that also chose not to delay cancellations, but where rate regulation will help protect consumers, it's unforgivable that Covered California rejected the President's plan, said Consumer Watchdog.   

The initiative measure on the November 2014 ballot would require health insurance companies to publicly justify rate hikes, and get approval from the state's elected insurance commissioner, before they take effect. The measure would also allow for refunds of excessive rate increases imposed by health insurance companies since November 2012, meaning excessive rate increases consumers face on January 1, 2014, could be returned as refunds if the measure passes. Read more at:

The health insurance industry negotiated contract provisions with Covered California that required them to cancel all existing health plans. Neither federal or state law required such cancellations.

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Jamie Court
Jamie Court
Consumer Watchdog's President and Chairman of the Board is an award-winning and nationally recognized consumer advocate. The author of three books, he has led dozens of campaigns to reform insurance companies, financial institutions, energy companies, political accountability and health care companies.

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