Calif. Officials Require Blue Shield To Delay Policy Cancellations

On Monday, Blue Shield of California officials said that the California Department of Insurance has required the insurer to delay for three months the cancellation of more than 115,000 health plans that do not meet the Affordable Care Act's requirements, the San Francisco Business Times' "Bay Area BizTalk" reports (Rauber, "Bay Area BizTalk," San Francisco Business Times, 11/4).

Background

Certain 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.

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;
• Kaiser Permanente; and
• Health Net (California Healthline, 11/1).

Details of Delay

Steve Shivinsky, a spokesperson for Blue Shield, said the insurer "had a disagreement with the state over the 90-day notice we gave to ... policyholders, and we were faced with a lawsuit if we did not agree to their requirement for the 90-day extension."

Shivinsky said that 80,000 policyholders are being notified of the change.

The plan cancellations now must take place by March 31, 2014, according to Shivinsky.

Blue Shield officials said the delay carries "significant risks [for] policyholders," including:

• Potential liability for two deductibles; and
• Loss of tax credits or subsidies available through the state health insurance exchange.

Blue Shield officials said that "healthy individuals who use few health care services" would be most likely to remain on the plans for the extra time period, which could keep them out of the exchange pool for longer.

Insurance Commissioner's Comments

In a media advisory, state Insurance Commissioner Dave Jones (D) said that about 115,000 policyholders would be able to "keep lower priced, wider network policies through the first quarter of 2014" under the extension.

On Tuesday, Jones plans to hold a press conference to discuss the extension ("Bay Area BizTalk," San Francisco Business Times, 11/4).