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).