California Will Not Allow Health Insurers to Reinstate Coverage

More than a million California residents whose health plans were cancelled under the Affordable Care Act, a.k.a. Obamacare, will not be able to keep their existing coverage, despite President Obama’s directive that insurers keep such plans available for another year.

The decision about whether to implement the president’s administrative “fix” rested with Covered California, the state’s new insurance exchange. The exchange’s board announced today that it would not allow insurers to revive plans that fell short of the ACA’s coverage mandates. Instead, California’s exchange will stay the course and continue to enroll residents into Obamacare.

"Covered California made the best decision for consumers by supporting the success of our new health insurance marketplace,” said Patrick Johnston, President and CEO of the California Association of Health Plans. “Today’s decision comes with a renewed effort to ease the transition process for consumers in the form of a five-step action plan focusing on extending deadlines and increasing enrollment assistance.”

The decision will undoubtedly disappoint California residents who liked their previous coverage and had hoped they could keep their nonconforming plans for another year. The announcement also drew the consternation of state Insurance Commissioner Dave Jones, who previously expressed support for President Obama’s directive.

"Covered California rejected what President Obama and I asked for – that individual policyholders be allowed to keep their existing health insurance through all of 2014. Covered California’s decision denies Californians the same opportunity health insurers are giving to its small business customers who are being allowed to renew current policies throughout 2014.”

The board’s decision, however, does not come as a surprise. Allowing nonconforming policies to continue for another year poses a risk to Obamacare’s financial viability as the move could prevent young, healthy individuals from participating in the new exchanges. A risk pool disproportionately made up of previously hard-to-insure participants could cause premiums to soar.

We will watch the developments and keep you informed.