State Sen. Gaines Sues Covered Calif. Over Canceled Health Plans
On Tuesday, state Sen. Ted Gaines (R-Roseville) filed a lawsuit against Covered California alleging that the state's insurance exchange acted illegally by refusing to allow more than 900,000 individuals to keep health insurance plans that did not comply with the Affordable Care Act's minimum standards, the Sacramento Business Journal reports.
Gaines is running for state insurance commissioner (Robertson, Sacramento Business Journal, 3/5).
In November 2013, President Obama announced a plan that would allow insurers in 2014 to continue selling insurance plans even if they do not meet the law's requirements.
California Insurance Commissioner Dave Jones (D) urged Covered California to implement Obama's proposal.
However, Covered California's board unanimously decided not to allow insurers to continue selling policies that do not meet the ACA's minimum coverage requirements.
In a statement, the board said that "extending the deadline offers no benefit to the consumer and may create confusion about accessing affordable health care coverage" (California Healthline, 11/22/13).
Details of Lawsuit
The lawsuit, which was filed in the Los Angeles County Superior Court, argues that the exchange violated both federal and state law when it required insurers to cancel nearly one million noncompliant policies (Sacramento Business Journal, 3/5).
Gaines -- who also owns an insurance company -- added that Covered California violated the law by refusing to extend such policies, even after Obama gave states permission to do so (O'Neill, "KPCC News," KPCC, 3/5).
According to the Business Journal, Gaines is seeking a court order that would prohibit Covered California from requiring insurers to cancel noncompliant plans.
In addition, the lawsuit calls for more insight into the hundreds of millions of dollars that are spent on exchange marketing and outreach efforts (Sacramento Business Journal, 3/5). Specifically, Gaines cited:
- $106.2 million in advertising that the lawsuit states "has failed to obtain significant enrollment, or a demographically or actuarially diverse enrollment;"
- $10 million on a contract with Weber Shandwick, a public relations firm; and
- $1.3 million for an infomercial.
Gaines said he has asked Covered California Executive Director Peter Lee to provide details on the exchange's marketing efforts, but Lee has not yet complied with the request (Williams, AP/U-T San Diego, 3/5).
Covered California Reaction
Covered California spokesperson Dana Howard said, "We haven't seen the documents at this time, so we are not commenting" (Sacramento Business Journal, 3/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.