Nearly 1M California Policyholders Face Plan Cancellation Under ACA

Nearly one million health insurance policyholders in California could have their plans cancelled as the Affordable Care Act takes effect, according to a Covered California official, the San Francisco Business Times' "Bay Area BizTalk" reports (Rauber, "Bay Area BizTalk," San Francisco Business Times, 10/30).

Background

Many plans will be cancelled under the ACA because they do not meet the law's minimum coverage levels. Exchange officials say that the cancellations also will ensure that insurers do not keep the healthiest individuals out of the state health insurance exchange.

Middle-income Californians in the individual market could face a 30% rate increase on average when they sign up for new plans.

However, about half of state residents who have policies through the individual market will not be affected by the law because they have "grandfathered" plans that were purchased before March 2010 (California Healthline, 10/28).

Details of Cancellations

Peter Lee, executive director of Covered California, told the San Francisco Chronicle editorial board that as many as 900,000 state residents could be forced to switch plans under the ACA.

Several insurers participating in California's exchange already have sent notices to some of their policyholders whose current health plans will be canceled, including:

  • Blue Shield of California, which has sent 119,000 cancellation notices;
  • Kaiser Permanente, which has sent 160,000 cancellation notices; and
  • Health Net, which sent 76,000 cancellation notices.

Anthem Blue Cross has not yet announced whether its policyholders will face such cancellations.

If the insurer is affected at the same rate as others participating in the exchange, about 380,000 additional policyholders could receive cancellation notices.

Reaction

Patrick Johnston, president of the California Association of Health Plans, said the cancellations are the "delayed effect" of the ACA.

"The attention is caused by the notices that people are receiving, but the (ACA) set up the transition," Johnston said ("Bay Area BizTalk," San Francisco Business Times, 10/30).

Frank Apgar
I too am puzzled by the statements that plans in California are being cancelled because they don't meet the minimum benefit standards required by ACA. California has had mandated benefits that mirror what is required by ACA for many years. This includes maternity, termination of pregancy, birth control coverage, preventative care and mental health parity. This statement therefore needs to be carefully explained by those who are using this explanation regarding what requirements weren't being met that resulted in policy cancellations. SSomething doesn't make sense here when looked at critically. Further, even if plans didn't have the minimum benefit standards, they would have been grandfathered under ACA. Is it possible that the policy holders raised their deductible as premiums rose in the last 2 years, unknowingly undoing the grandfather clause.
Carol Frandsen
Many of us were happy with our plans. I know I was very happy with my HealthNet plan. Thats the trouble. Our happiness is not profitable. We, the individual policy consumers, are the ones who are going to pay for this program. The lower income people are not. They will get a tax credit or Medi-Cal. People who get their coverage through their employers or their good government insurance are not---they are in their separate, established, more economical pools. Whose left?? Who will have to go to the exchanges? We are the only ones left. Its not rocket science. So now we are going to get the higher rates. They want to ignore us, the 5%. Let them. They need us. But if we cant afford to participate...oh well. So thats why I have been telling people that are getting a good deal w/ACA---dont thank POTUS, thank the families and individuals who are going to pay the tab.
Joey Torcellini
My wife's Anthem Hippa 1500 plan was/is grandfathered. This is a very expensive plan she purchased in 2006. She is 58 and is now paying $977 per month, with $1500 deductible and $6000 max out of pocket. It is a special plan for people who were once in a group plan and exhausted their cobra. It is essentially a "guaranteed issue" policy Anthem is forced to provide by law. My wife had preexisting conditions and could not get insurance otherwise. I am really surprised this policy is grandfathered, as only uninsurables (who were once on a group plan) are in this plan. I would think Anthem would be losing money on this plan. The few changes to the plan over the years must not have been big enough to force cancellation.
Frederick Pilot
I am a bit surprised at the large number of individuals still covered under grandfathered policies given the significant flux in the individual market since March 2010 between HMO and indemnity plans and the discontinuation of some plans.
Joey Torcellini
Healthnet found a loop hole in the law by canceling all the policies in Alameda county. My Healthnet policy, which I purchased Jan 1 2013, is a very good policy, and includes many ACA requirements such as free preventative care. As long as the public can be discriminated based on their zip code, the insurance companies will find ways to pick and choose who they want to insure. The ACA should not have allowed policies to be written based on zip code/county. Or, at a minimum, required an insurer to provide insurance in all counties in a state. For Healthnet to insure all the counties surrounding Alameda county, but not Alameda county, should not have been allowed in the new spirit of the ACA laws.

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