12/26/2014
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California's health exchange is violating the law by canceling private coverage for up to 95,000 people because they might qualify for Medi-Cal, the state's insurance commissioner says.
At issue is health insurance for some of the poorest Californians whose incomes aren't high enough to even qualify for subsidized policies in the Covered California exchange.
The state marketplace is notifying thousands of policyholders that their federal premium subsidies for Obamacare coverage will end Dec. 31 and their private health plan won't be renewed starting in January. Instead, these people will be put into Medi-Cal, the state's Medicaid program for low-income residents.
California Insurance Commissioner Dave Jones has been urging the exchange to reconsider. "The law is very clear. They can't cancel people," Jones said in an interview.
All this comes at a pivotal time for Covered California. The exchange is trying to renew more than 1 million policyholders during the second open enrollment under the Affordable Care Act and sign up several hundred thousand more before enrollment ends Feb. 15.
Consumer groups and health insurers have also voiced concerns about Covered California's handling of the cancellations.
They warned the exchange that thousands of people could be stranded without coverage while waiting to be determined eligible for Medi-Cal.
For months, the Medi-Cal program has faced a backlog of applicants, leaving some people to wait months to get coverage confirmed. The state said it has resolved most of that bottleneck and about 75% of applicants since Nov. 15 have been enrolled without delay.
To minimize disruption, Covered California said this week it reached an agreement with state and county health officials to ensure policyholders are moved into Medi-Cal effective Jan. 1.
"There will be no gap in coverage for these people," said exchange spokeswoman Amy Palmer. "We will make sure Medi-Cal kicks in immediately."
Palmer said the exchange is complying with the law and disagrees with Jones. She said the number of people affected should be less than 95,000, but she didn't specify a figure.
Covered California said federal rules require this action to be taken when people's income falls to a certain level. Individuals earning less than $16,000 a year or nearly $33,000 for a family of four may qualify for Medi-Cal.
"It would be inappropriate to renew them and continue to pay a subsidy," Palmer said. "The law requires us to seamlessly move people from one program to the other."
Jones disputes that interpretation and points out that the Obama administration is allowing people on the federal exchange used by 37 states to keep their coverage with a premium subsidy while their Medicaid status is worked out.
The commissioner said health plans are required to renew policies except for specific reasons such as a customer's failure to pay premiums, evidence of fraud or relocation to a new area. He said the fact that a person might be eligible for Medi-Cal isn't grounds for cancellation under state law.
Even if their premium subsidy is taken away, Jones said, people should be allowed to renew and pay the full amount themselves.
"These are adults and they get to make that decision," Jones said. "The government doesn't make that decision. You can't force people into Medi-Cal if they don't want to go there."
With these changes set to occur next week, consumer advocates and health insurers welcomed the state's guarantee of immediate coverage for people losing their private health plan.
But they remain concerned that some people will fall through the cracks and fail to be notified prior to Jan. 1. The exchange has apologized in the past for sending inaccurate or confusing notices.
"We are pleased that people will have continuous coverage," said Beth Capell, a lobbyist for Health Access, a consumer advocacy group. "We do worry that people will be confused and that the transition will not be as seamless as hoped for."
A spokeswoman for the California Assn. of Health Plans said insurers "will do their part to ensure a smooth consumer experience."
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