California officials considering a presidential invitation to extend canceled health policies face potential roadblocks: Possible legal action from outside parties and insurers’ inability to meet exceedingly tight deadlines.
President Barack Obama is granting states the right to decide whether to allow customers who purchased their own insurance after passage of the federal health care overhaul to keep the plans for another year. After promising that no one would lose coverage they liked, Obama reversed course amid a furor over millions of Americans losing their plans in return for others that conform to the law but often have higher monthly premiums.
States such as Washington, Minnesota, Massachusetts, Rhode Island and Vermont have opted to stay the course.
On Thursday, Covered California is set to consider the president’s offer as an estimated 1 million customers here are facing terminations and nearly 600,000 should expect to pay more.
Insurance Commissioner Dave Jones has asked the exchange to release insurers from the agreement to cancel policies that don’t comply with the federal law. Jones also called on all insurers to issue new notices offering customers the option to renew existing policies.
His announcement came after negotiations of short-term reprieves for about 220,000 customers with two large insurers – Blue Shield and Anthem Blue Cross.
But the state could face a series of obstacles to extend that privilege to everyone else.
“The president’s proposal to extend policies for the next year could conflict with state law and poses logistical complications,” said Patrick Johnston, president and chief executive of the California Association of Health Plans.
Last week, Johnston said reversing course on the law could cause a significant disruption in the marketplace given that rates and benefit plans for the coming year have already been set by Covered California. He added that the underlying premise of the law, balancing costs of the younger, healthier people and those who are older and sicker, has been left adrift with the invitation to delay.
Individual policies renewed beginning next year must comply with state law, which has incorporated several major aspects of the federal act.
Insurers here cannot deny coverage based on pre-existing conditions and there are new limits on out-of-pocket expenses. Policies must be included in a single risk pool and older customers cannot be billed more than three times what their younger counterparts are made to pay.
If Covered California allows customers to keep their plans for another year, insurance companies would be required to send another round of letters.
Many of the customers already have been notified their plans are terminating Dec. 31. A smaller group has until the end of February or the end of March.
Customers must be given 60 days notice about changes to their plans. For coverage renewal to take effect before Jan. 1, they would have needed to be informed by late October. Regulators may decide to waive or not enforce the noticing requirement, but that would not prevent others from suing the insurers for running afoul of the law.
Health insurers are expected to testify at Thursday’s meeting but had little to say about the changes in advance.
Chris Stenrud, a spokesman for Kaiser Permanente, said the company has been in contact with regulators and the exchange about some of the potential barriers.
“However, out of respect for those conversations and the process overall, we don’t have anything to add publicly,” Stenrud said.
Stephen Shivinsky, a spokesman for Blue Shield of California, said the company continues to work with state regulators, public officials and the exchange to understand the implications of the president’s announcement last week.
“We remain firmly committed to the goal of providing access to high quality, affordable health care for all Californians,” Shivinsky said.
Roughly 59,000 customers enrolled in the state exchange from its launch Oct. 1 through last Tuesday.