SACRAMENTO (CBS/AP) – The board overseeing California’s health insurance exchange voted unanimously Thursday to stick with its current year-end deadline of phasing out more than 1 million individual health insurance policies that fail to meet requirements of the federal health care overhaul, turning aside a plea by President Barack Obama to let those policies continue.
In voting 5-0, Covered California board members said allowing the older polices to continue would undermine the new insurance marketplaces. Those policies are being ended because they do meet the more extensive requirements for essential benefits under the federal Affordable Care Act.
“There’s no way to make the federal law work without this transition to ACA-compliant plans,” board member Susan Kennedy said. “Delaying the transition isn’t going to help anyone; it just delays the problems. I actually think that it’s going to make a bad situation worse if we complicate it further.”
The state insurance commissioner has said that 1.1 million Californians are receiving notices that their current individual health insurance policies will be discontinued in 2014, a deadline previously agreed to by the exchange and insurers. Nearly 220,000 policies will be extended until March because the companies failed to meet regulatory deadlines for notifying policy holders.
The cancellations have angered some policy holders, many of whom will see their monthly premiums and deductibles rise sharply under new plans. They also fly 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 extending the policies, 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.
Officials described myriad complications if the board had agreed to modify the existing policy cancellation contract Covered California has with insurers, including how much premiums could rise, whether consumers might be subject to two deductibles in one year and the tight timeline in which to make a decision, with the end of the year quickly approaching. Insurance companies would need to notify customers that they were re-offering the old plans and process customer payments before Dec. 31.
Charles Bacchi, executive vice president of the California Association of Health Plans, said higher premiums for some consumers are inevitable, “whether it’s today, whether it’s three months from now or whether it’s next year.” But he said a delay in the policy cancellations was unnecessary because California’s marketplace website is operating pretty much as planned.