More healthcare sticker shock as 1 million Californians face policy cancellations

As a national debate rages over individual health policy cancellations because their coverage doesn’t meet the Affordable Care Act’s requirements, another shoe is likely to drop very soon in California. That’s because, so far, there’s been no word on how the changes will affect enrollees in individual and family plans at Anthem Blue Cross, which rivals say is by far the biggest player in the Golden State’s individual market, with about 760,000 enrollees.

[Note: Letters are currently being sent to Anthem Blue Cross members]

  • If Woodland Hills-based Anthem’s enrollment is affected at about the same rate as other insurers’ individual plans in California, about half of those members — or approximately 380,000 — may have received letters in recent weeks telling them their current plans are being cancelled, and advising them on alternate options. Anthem officials haven’t yet chimed in, and have not responded so far to multiple requests for comment and enrollment data by the San Francisco Business Times. 
  • But close to 1 million Californians are likely to be forced to switch health plans due to national health reform’s requirements. Peter Lee, executive director of the Covered California exchange, told an editorial board meeting at the San Francisco Chronicle this week that 900,000 individual policyholders would be in that position, according to an Oct. 29 blog post by Chronicle columnist Debra Saunders.
  • Patrick Johnston, president of the California Association of Health Plans, described the controversy as “the delayed effect of the law that was passed in 2010,” the ACA. “The attention is caused by the notices that people are receiving, but the (ACA) set up the transition,” Johnston told the Business Times. “The health plans implement the law, they didn’t create it.”
  • No one can be denied insurance because of pre-existing conditions under the Affordable Care Act, which is a popular provision, he said, but because of the changes some people “will pay more,” including people who chose less comprehensive, and consequently less expensive coverage that is no longer one of the options. “They were probably probably health and relatively young,” for the most part, and the ACA is now moving them, as planned, into a pool that includes many older and sicker individuals. That’s why in many cases their costs are going up steeply.
  • A number of national stories have mentioned that San Francisco-based Blue Shield of California is cancelling current individual coverage for 119,000 enrollees, and that Kaiser Permanente is taking a similar step with 160,000 members. The Business Times reported yesterday that 76,000 Health Net of California enrollees also received letters informing them of the need to switch to a so-called “compliant plan.”
  • Some enrollees in individual plans in California are allowed to stay put, having been “grandfathered in” because they signed up for coverage before passage of the Affordable Care Act, aka Obamacare, in March 2010. But the Golden State has about 2 million members of such plans, according to a Los Angeles Times story late last week, and roughly half of them may be forced to move into other coverage by Jan. 1 that meets the ACA’s strictures, including offering more comprehensive coverage than many bare-bones individual plans have provided.
  • Although much of policyholders’ ire has been directed at the health plans that sent the letters, executives at a major California health insurer point to language in contracts they and other plans signed with the Covered California exchange that require them to “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.”

So far, Covered California hasn’t released updated information on completed applications since a week after the site went live Oct. 1, and haven’t provided any information about how many — if any — Californians have successfully enrolled. Twelve Golden State health plans signed contracts with Covered California in August to participate in the exchange, but a small subset of those plans — including Anthem, Blue Shield, Health Net and Kaiser Permanente — provide the bulk of individual coverage in the state.

Participating health plans spent much of the summer finalizing details of the Covered California contracts, many of which “had a material effect on the actual plans we would offer in 2014,” said a participant at one of the major players. Not until late August did one major player, for example, have health plan details and pricing nailed down. Then it had to compare those details against existing coverage provided to tens of thousands of individual plan members whose coverage wasn’t deemed to be ACA-compliant (many other policyholders were grandfathered in, according to federal guidelines).

The health plans with individual policyholders were legally required to advise policyholders of any “material changes” to their coverage at least 90 days in advance, the health plan executive said, which meant letters had to reach enrollees by Oct. 1.

*Modified from a article

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