California Continues Rollout: Won’t Allow Cancelled Policy Reinstatements

This Fall, hundreds of thousands of non-compliant health insurance plans began to be cancelled throughout the nation. These plans did not comply with the new requirements set forth in the new healthcare reform law, and for that reason, were deemed not “legal.” As a result, these non-compliant plans needed to go. For more information about why, see this blog post.

However… last week, in light of these cancellations, the Obama Administration made the decision to allow insurers to reinstate these cancelled non-compliant plans. This would allow those plans to be continued for at least the remainder of 2014.

During his campaign to promote healthcare reform, President Obama reiterated that “If you like your plan, you can keep your plan.” However, in this example (the cancellation of these non-compliant health plans), this did not hold true. For this reason, the administration felt it was responsible for not “honing up” to the promise that it made. As a result, Obama decided that those plans that were cancelled needed to be reinstated for at least an additional year.

However, California was one state that did not agree with the Obama Administration’s decision to reinstate these cancelled policies. The executive board of Covered California (the new state health insurance exchange) unanimously voted to continue to move on with reform implementation, and not reinstate cancelled health insurance policies. This decision was on-par with many state insurance commissioners, and also with certain insurance company executives within the industry.

Here are some of the reasons why some states, insurance commissioners, and insurance executives thought policy reinstatements would be a bad idea:

  • Insurance Companies: Reinstatement of cancelled plans would contribute to the destabilization of an already turbulent insurance market.
  • Covered California (the new state exchange): Covered California was already leading the way with exchange enrollments. Nearly one-third of those enrolled in the first month at both the state & federal exchanges (in other words, nation-wide) were Californians. It made little sense to slow down.
  • Insurance Commissioners: Being this far into the implementation of reform, various insurance commissioners throughout the country also felt that it was inappropriate to reinstate health insurance plans that had been cancelled.

For these reasons (and others), a handful of states made the decision to tell the Obama Administration “thanks, but no thanks” when it came to reinstating policies. Certain states continued to move along with reform implementation as-is, and California was one of those states.

As a result, individuals now have more time to enroll in the state health insurance exchanges. The original open enrollment deadline for a 1/1/2014 plan start was 12/15/2013. This has now been moved back to 12/23/2013. 

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