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California Rejects Obama’s Insurance Cancellation Fix

By Alison Vekshin
November 21, 2013 6:42 PM EST

California officials implementing President Barack Obama’s health-care overhaul rejected a one-year extension of insurance plans that are to be canceled under the law.

The president has urged states to give people with substandard medical plans an additional year to meet the law’s requirements after hundreds of thousands received cancellation notices and were told new policies to meet minimum rules for coverage would cost more.

“That’s making the best of not-great options, but I think it’s the best option and then we can focus in the coming months on the enrollment we need,” Peter V. Lee, the executive director of Covered California, the health exchange, said today at a meeting in Sacramento.

California’s decision is critical to the rollout of Obamacare nationwide. The most populous U.S. state, which received almost $1 billion in federal grants to implement the Patient Protection and Affordable Care Act, led the U.S. in signups last month. The law requires all Americans to be covered next year or pay a penalty.

Obama appealed for the added time because the cancellations conflicted with his promise that consumers who liked their existing plans could keep them. The Covered California board weighed extending the canceled plans through March 31 or through Dec. 31, 2014, or allowing them to expire at the end of next month.

Individual States

Prolonging the policies “is up to individual states to decide,” White House spokesman Josh Earnest told reporters in Washington when asked about states not complying with the president’s request. “That is as much as we can do.”

At least 12 states, from Florida to Hawaii, have agreed to the extensions, according to America’s Health Insurance Plans, a Washington lobby group for the industry.

California Insurance Commissioner Dave Jones said last week he opposed the cancellations and agreed with Obama’s call to allow people to stay in existing plans for an extra year.

Jones asked Covered California to release health insurers from a requirement that they cancel existing individual policies that don’t comply with the health law’s rules.

The exchange said 79,891 Californians had selected a health plan through Covered California as of Nov. 19. Enrollment began Oct. 1.

The U.S. Department of Health and Human Services today called on insurers to tell customers that if the substandard plans are extended, they won’t be subject to the rights and protections of the health-care law. Insurers also must inform people they have new options through government-run marketplaces and may be eligible for tax credits.

To contact the reporter on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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