California Health Exchange Votes Not to Renew Canceled Insurance Plans

Despite requests by President Obama and California Insurance Commissioner Dave Jones, the board of Covered California, the state’s health insurance exchange, will stand by its decision to require participating insurance companies to cancel individual plans that do not meet the standards of the Affordable Care Act by January 1, 2014.

Here’s why.

Online health care insurance enrollments in California jumped substantially in California during November. Two groups account for much of this growth: young people ages 18 to 34 and high-income earners who do not qualify for a subsidy under the Affordable Care Act.

This is important because these two groups, especially young people, are seen as critical to the success of the health care insurance exchanges. Officials fear that allowing the renewal of canceled policies will keep these critical subscribers from choosing to purchase new plans through the exchange.

Covered California board member Susan Kennedy argued that delaying the cancellations would not solve any problems and would further complicate the situation.*

According to Kennedy, with the enrollment period ending on March 31, a six-month delay in cancellations could result in higher premiums on subscribers seeking to renew their coverage in the middle of next year. In addition, it would be too late for these consumers to buy new coverage or to take advantage of premium subsidies for which they might qualify.

In making their decision, the exchange added a week to the deadline for sign-ups to receive coverage by January 1. The new sign-up deadline is December 23. About one million policyholders are affected in California.

*Chad Terhume, “California Won’t Extend Health Plans,” Los Angeles Times (Nov. 21, 2013).