Insurance Commissioner Jones calls Covered California's extension denial a disservice to policyholders
News: 2013 Press Release
SACRAMENTO, Calif.- Insurance Commissioner Dave Jones issued the following statement in response to Covered California's decision to deny health insurers the ability to renew existing policies:
"Over a million Californians have received cancellation notices from their health insurer. On behalf of these policyholders I am disappointed in Covered California's action, which denies individuals and families the opportunity to keep their existing health insurance as President Obama promised.
"Covered California rejected what President Obama and I asked for-that individual policyholders be allowed to keep their existing health insurance through all of 2014. Covered California's decision denies Californians the same opportunity health insurers are giving to its small business customers who are being allowed to renew current policies throughout 2014.
"Covered California could have honored President Obama's request, without causing damage to the implementation of the Affordable Care Act or the Exchange.
"The preferred and more equitable course of action for California consumers is for Covered California's unnecessary cancellation to be rescinded. Allowing existing policyholders to keep their health insurance for the duration of 2014 will not undermine the implementation of the ACA, but rather will give consumers more time to figure out what makes sense for their families."
Commissioner Jones has been a staunch supporter of the ACA since its passage and throughout its implementation. Last week President Obama called on states and insurers to allow existing policyholders the option to renew their plans for an additional year. Commissioner Jones expressed his support of the President's request and asked that Covered California rescind its contractual provision with 11 insurers, which impeded their ability to honor the President's request.
As the state's insurance market regulator, Jones has made it clear that neither state nor federal law, including the ACA, requires December 31 cancellations. More than 1 million Californians are receiving cancellation notices from insurers, who are upset because they were told by the President if they liked their health insurance, they could keep it. Jones pointed out that all existing policies are not "junk insurance." California has strong coverage mandates, as demonstrated by the many policyholders who want to keep their existing policies and doctors. Jones noted that it is disingenuous for health insurers to argue that allowing renewals will harm the exchange, because cancellation notices being sent to policyholders are steering them into insurance products outside the Exchange, which deprives the policyholder of the federal premium subsidy.Jones also stressed that allowing existing policyholders to renew for a full year will not undermine the risk pool, as the ACA has robust features which mitigate the risk of health insurers having a disproportionate share of sick people in their risk pool in 2014. Additionally, it is estimated that 400,000 existing policyholders are eligible for subsidies. Even if allowed to renew their current coverage, many consumers will purchase new insurance through the Exchange because of the subsidy. For all of these reasons, the Insurance Commissioner concluded that allowing renewals would not hurt the Affordable Care Act or the Exchange, but should be allowed to make good on the promise to policyholders.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.