Within the contract that all insurance companies had to sign to offer health plans through Covered California was the stipulation that the “contractor” (aka insurance company or health plan) cancel all outstanding policies that didn’t comply with the ACA by December 31, 2013.
COVERED CALIFORNIA QUALIFIED HEALTH PLAN CONTRACT FOR 2014*
FINAL STAFF RECOMMENDATION
May 23, 2013
3.04 Offerings Outside of Exchange.
(b) Contractor agrees that, to the extent not already required to do so by law, effective no later than December 31, 2013, it shall terminate or arrange for the termination of all of its non-grandfathered individual health insurance plan contracts or policies which are not compliant with the applicable provisions of the Affordable Care Act. Contractor agrees to promote ways to offer, market and sell or otherwise transition its current members into plans or policies which meet the applicable Affordable Care Act requirements. This obligation applies to all non-grandfathered individual insurance products in force or for sale by Contractor whether or not the individuals covered by such products are eligible for subsidies in the Exchange. All terminations made pursuant to this section shall be in accord with cancellation and nonrenewal provisions and notice requirements in California Health and Safety Code Section 1365, California Insurance Code Sections 10273.4, 10273.6 and 10713, and relevant state regulations and guidance.
*This contract may have been changed or revised since it was released by Covered California.
I first blogged about the potential of plan closures back in June: Covered California may cancel your plan
Covered California staff pushed for December 31 plan cancellation
I distinctly remember on the stakeholder’s webinar where this provision was discussed. Originally, the cancellation date was March 31, 2014. Covered California staff advocated for moving the date up to December 31, 2013. Subsequent review of the webinar may prove me wrong, but part of the rational for the earlier date was to create more of an impetus for consumers to purchase plans through Covered California.
Restraint of trade?
Just like the provision that the carriers only health plans outside the exchange that are material similar to plans offered through the exchange, the December 31 cancellation date was meant to reduce competition for health plans offered through Covered California. The carriers that have cancelled plans, and are bearing the brunt of consumer anger, have been quiet on delineating all the reasons why various plans are being closed. Blue Shield, and most recently Anthem Blue Cross (see below), has agreed to suspend cancellation until March 31, 2014.
Health plans bite their tongues
The lack of comment or defense of the plan cancellations has to do, in my estimation, diplomatic politics. Insurance companies and health plans must interact with all the regulators like Covered California, Department of Insurance and the Department of Managed Health Care on an almost daily basis. The carriers don’t want irritate or alienate the regulators when they need approval for different products all the time. The health plans have bitten their tongues rather than point out the inconsistencies in the contracts and regulations that have led to the plan cancellations.
Bureaucratic turf war?
Consequently, the insurance companies will not point the finger at Covered California for the health plan cancellations. Insurance Commission per Dave Jones is using his authority to enforce the regulation that insurance companies must give proper notice to plan members before they cancel a plan. The delay will technically put the carriers in violation of the agreement they signed with Covered California. Except for Dave Jones standing up for consumers, Covered California seems to be blissfully ignoring the controversy instead of owning up to cancellation trigger in their contract. But the conspiracy of silence seems to be the method of operation for Covered California when there are policy or website issues that cause consumers and agent tremendous aggravation.
Insurance Commissioner Jones statement about cancellations
November 14, 2013
“Over my objections, Covered California required health insurers participating in the Exchange to cancel all non-grandfathered individual policies on December 31,” said Jones. “Health insurers should not be required by Covered California to terminate policies. Today, I formally requested that Covered California release health insurers selling in the Exchange from the contract provision that requires them to cancel policies on December 31.”
With all due respect Commissioner, why didn’t you go public last June when Covered California made the decision? Politics. What is it good for? Absolutely nothing.
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November 12, 2013 News Release
Commissioner Jones announces Anthem will delay policy
cancellations for some individual market policyholders
104,000 consumers may keep policies at existing price through February 2014
SACRAMENTO, Calif – Insurance Commissioner Dave Jones announced today that Anthem Blue Cross Life and Health Insurance Company will delay the December 31 policy cancellations for 104,000 California consumers covered by individual and family (non-grandfathered) policies giving them more time to look for coverage that meets their needs.
After being informed by Anthem that due to a computer glitch 104,000 policyholders had not received 90 days’ notice of cancellation as required by law, the commissioner asked Anthem Blue Cross to send out new notices to those policyholders and give them the option to extend their current policies, with their current doctors and hospitals at their current rates until February 28. Anthem will mail out new notices by November 15. If all 104,000 of these policyholders elected to keep their existing coverage through February 28th, they would save an estimated $23 million from Anthem’s 2014 rates.
“Neither state nor federal law allows me to stop the 1 million cancellation notices sent to Californians, despite my opposition to these cancellations,” said Commissioner Jones. “We will, however, do everything within our power to extend existing policies where health insurers are not in full compliance with notice requirements. Because Anthem did not give 90 days’ notice to 104,000 policyholders as required by law, Anthem agreed to provide 104,000 policyholders with the option to extend their current policies until February 28th, giving them the opportunity to keep their doctors and hospitals and keep their current rates, saving $23 million.”
Policyholders must notify Anthem Blue Cross by December 15 if they wish to keep their existing policies through February. Anthem policyholders should evaluate carefully whether keeping their existing policy into 2014 is beneficial. They should shop and compare all health insurance available to them. Policyholders should contact Covered California at www.coveredca.com to see if they are eligible for a premium subsidy. If they are eligible for a subsidy, it will probably be better for them to sign up for new coverage through Covered California by December 15 in order to start receiving the premium subsidy in January. This is the second extension of policies required by Commissioner Jones. Last week Blue Shield was required to extend policies for 115,000 policyholders after failing to comply with notice requirements.
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Media Note:
- The law requires health insurers to give consumers 90 days’ notice when the insurer is cancelling the policy and offering new coverage options.
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FOR IMMEDIATE RELEASE: November 14, 2013
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NEWS RELEASE
Insurance Commissioner Dave Jones calls on all California insurers and HMOs to allow policyholders to keep existing coverage through 2014
Requests Covered California release insurers in Exchange from contract provision
mandating December 31 policy cancellations
SACRAMENTO, CA – Taking immediate action in response to President Obama’s announcement, Insurance Commissioner Dave Jones today requested that all California health insurers and HMOs provide current customers the option to renew their existing non-grandfathered policies for 2014 and issue new notices to policyholder advising them of their options.
“The President’s action today makes it crystal clear that health insurers and HMOs are not required by federal law to cancel existing policies,” said Jones. “California has more than 1 million people with non-grandfathered policies facing cancellation; they should be given the opportunity to keep their existing coverage next year. I am calling on all health insurers in California to let their policyholders keep their existing coverage for an additional year if they want it.”
At a press conference in San Francisco, Jones further noted that health insurers in California are not cancelling their small business policyholders. They are allowing small businesses to renew their existing policies for another year although those policies don’t comply with the new 2014 requirement, but decided to cancel family and individuals plans.
Commissioner Jones also called on Covered California to release all health insurers selling in the Exchange from the Covered California contract provision that requires health insurers to cancel plans for individual policyholders on December 31, 2013.
“Over my objections, Covered California required health insurers participating in the Exchange to cancel all non-grandfathered individual policies on December 31,” said Jones. “Health insurers should not be required by Covered California to terminate policies. Today, I formally requested that Covered California release health insurers selling in the Exchange from the contract provision that requires them to cancel policies on December 31.”
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