Covered California: Canceled Policies Will Stay Canceled

Published on

Steve Goldsberry said he knows what California's decision not to allow canceled health insurance policies to be extended will cost him.

"Six grand a year," said the Simi Valley general contractor who believes he may end up paying $500 more a month because his current policy doesn't meet the Affordable Care Act's standards. "I had insurance that was adequate. I got to choose. Now I no longer have a choice."

A board governing the Covered California health insurance exchange decided Thursday to keep its requirement that insurers cancel individual and family policies by Dec. 31 if they don't meet coverage standards under President Barack Obama's reform program. A week earlier, the president asked states and insurers nationwide to extend the canceled policies a year, giving people struggling with the federal government's faulty website a reprieve.

More than 1 million Californians face cancellation from individual polices, according to the state's insurance commission.

Supporters of the state decision to reject Obama's plan say extending the canceled policies could have brought skyrocketing premiums a year from now in the Covered California marketplace — built to cover people who are uninsured or have insurance through the individual market. They said the renewals would have only delayed the transition away from substandard policies.

Others cite Covered California data suggesting 590,000 of the people with canceled policies won't qualify for subsidies in the new reform marketplace. That means many of them — 450,000, according to the Consumer Watchdog group — may face higher premiums.

Goldsberry's current catastrophic policy covers a family of four. The cancellation notice from Anthem Blue Cross suggested he move to a policy outside of the exchange that costs $1,275 a month. He said comparable plans in Covered California would cost the same.

"What am I going to do?" he said. "I don't know. This is a $6,000-a-year taxation."

People can buy coverage that begins Jan. 1 through Covered California at rates that are defrayed by subsidies for people who meet income standards — up to $45,960 for individuals and $94,200 for a family of four. People younger than 30, or who meet financial hardship requirements, may be able to buy catastrophic plans on the exchange at lower rates.

Others with canceled policies will likely shop in and outside of the exchange. A 64-year-old woman from Ventura has already found a private plan that costs about the same. A downtown business woman in the same city said she will at least consider going without insurance and facing a penalty.

In 2014, that penalty is $95 a year or 1 percent of household income, whichever is larger.

The fear is that the issue that helped create reform — unaffordable coverage — will emerge from the canceled policies, said Carmen Balber, executive director of the Consumer Watchdog advocacy group. "They may have to go without if they can't afford the premium they're faced with," she said.

Others contend the president's extension plan wouldn't have provided the relief people want partly because insurance companies would have increased premiums in the renewed policies. But it's unclear if existing laws would allow rates to be increased, said Charles Bacchi, executive vice president of the California Association of Health Plans.

"We have different opinions from different lawyers," he said.

The people receiving cancellation notices are largely a healthy population, Bacchi said. Renewing their policies would have kept many of them out of Covered California. Instead the exchange would have been dominated in 2014 by people who are older, have more medical needs and are more expensive to cover.

The imbalance of the risk pool would have brought higher prices, Bacchi said.

"Premiums would skyrocket in the exchange in 2015," he said.

Bacchi said sending notices and getting people to renew policies before the Dec. 31 deadline would have been very difficult and would spawn confusion.

Among those rejecting many of the arguments are California Insurance Commissioner Dave Jones, who pushed the Covered California board to follow the president's plan. He earlier successfully pushed Anthem Blue Cross and Blue Shield of California to temporarily delay cancellations for more than 200,000 people.

Jones said Covered California's decision means people could face not only higher prices but more narrow networks of hospitals and doctors.

"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," he said.

Randy Encinas, co-owner of the Villa Tasca Gardens in Ventura, received a notice from Health Net saying he needed to move from his existing policy into another plan. Instead, Encinas may end up in a Covered California plan that he thinks could mean a savings of $700 a month.

The 49-year-old Ventura resident with a thyroid condition thinks the president's plan would have helped people by giving them more time. But he also sees Covered California's decision to stick with a Dec. 31 deadline as motivation to act.

"It just means you have to do it now," he said.

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