Covered California required heath insurers to cancel plans

November 8, 2013 - By Katy Grimes

President Obama just apologized for the millions of insurance policy cancellations under the Affordable Care Act, usually called Obamacare. He also has blamed “bad apple” insurers for the cancellations.

But in California, critics of the program insist the cancellations were not made by the insurers, but by Covered California, the state’s implementation of Obamacare. California compelled insurers participating in the Covered California health exchange to cancel noncompliant individual policies.road-sign

“In California, insurers did not ‘choose’ to eliminate individual plans for the efficiency of one health-reform compliant platform, California forced it on them,” Craig Gottwals told me; he is a health care policy attorney and Obamacare expert with BB&T-Liberty Benefit Insurance.

He said Covered California didn’t want to leave to chance forcing people into the insurance exchanges. The San Francisco Business Times detailed how Anthem Blue Cross, Kaiser Permanente, Health Net and Blue Shield of California finally admitted their Covered California contracts required the cancellations. Other plans on the exchange are subject to the same contract language.

Covered California out-maneuvered insurers

Gottwals provided the specific Covered California contract language:

“Contractor agrees that effective no later than December 31, 2013, except as otherwise provided in State Law, it shall terminate or arrange for the termination of all of its non-grandfathered individual health insurance plan contracts or policies which are not compliant with the applicable provisions of the Affordable Care Act. Contractor agrees to promote ways to offer, market and sell or otherwise transition its current members into plans or policies which meet the applicable Affordable Care Act requirements. This obligation applies to all non-grandfathered individual insurance products in force or for sale by Contractor whether or not the individuals covered by such products are eligible for subsidies in the Exchange” (bold-face added).

Darrel Ng, a spokesman for Anthem Blue Cross, explained to the Times what this meant for “quality health plan” insurers. “All QHPs (of which we are one) had to sign that contract,” he explained.

Added Blue Shield spokesman Steve Shivinsky, “In order to participate in Covered California as a qualified health plan, the contract required us to cancel non-ACA-compliant plans on December 31. Blue Shield supports this policy because it assures a large and balanced risk pool of individual and family plan subscribers.”

Reimbursement

Gottwals said the singular insurance issue with medical providers is reimbursement — getting paid for the treatment they give. Mandated coverage is the only way to save money in the system and cut reimbursement costs.

“It’s a race to the bottom,” Gottwals said. “Doctors will opt out of [accepting] insurance because of low reimbursements. It’s not philosophical. The only leverage the government has is, ‘We’ll cut reimbursements.’ There’s no other way to to save money in health reform because of the mandated benefits.”

Interestingly, Gottwals said the average age of persons enrolled in Obamacare is 51-54. By contrast, in 2013 the average age of someone enrolled in pre-Obamacare insurance was 41, which is close to the U.S. median age of 37 years.

“This is significantly going to blow costs up, and taxpayers will be on the hook to pay for the difference,” said Gottwals. That’s because older people require more health care.

He said there is a bailout plan already written into the Affordable Care Act, which requires U.S. taxpayers to pay the difference between what care is covered and what is not. “It is going to go way over budget, and taxpayers are on the hook for 80 cents on every dollar,” said Gottwals. “It’s a bad deal, and bad for taxpayers.”

However, Obama continued to insist this week that the ACA still will help Californians and other Americans:

“But to finish the job, now what we’ve got to do is sign up those folks who don’t have health insurance and improve insurance for those who are under-insured, who don’t have very good insurance, and have been subject to the whims of the insurance company.  And that’s what this is all about.  And that’s the challenge that we’ve got over the next month, three months, six months, next year.  And if we get that done — when we get that done — then we will have created a stable system in which there’s no reason why people shouldn’t be getting health care in this country.”

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Comments(22)
  1. The Ted Steele Conceptual Abstraction Unit says:

    Isn’t it funny to watch the anti Obama folks decry EVRYthing he has EVER done? LOL — broken record…

    I guess like Cruz’s Dad you want him back in Kenya?

    • John Seiler says:

      Ted: I’m not against everything Obama has ever done. He got us out of Iraq, and seems to be getting us out of Afghanistan. He called off the attack on Syria. There has been little protectionism. He spared us McCain.

      • LetItCollapse says:

        Got us out of Iraq?

        After we killed 500,000 of their citizens as a result of the invasion. Now they are back in full-on civil war after we promised to bring them freedom. So we throw their nation into violent civil chaos and then book. Real nice.

        Getting us out of Afghanistan?

        Just like he was going to let us keep our healthcare plans if we liked them, not make us pay an extra dime for Obamacare if we made less than $250,000, assured us that ObamaCare was not a tax and was going to give us all the same healthcare plan as congress?

        And now we’re supposed to believe him when he says he will get us out of Afghanistan?

        Called off the attack on Syria?

        He had no choice. Putin stared him down. Obama’s a brave man when it comes to beating down Libya or Syria militarily. But he folded like a deck of cheap playing cards when faced with a showdown with another superpower. The bully caved because someone as big as he is scared him off.

        McCain or Obama?

        Toss up.

        • John Seiler says:

          Collapse: Read my post more closely. It wasn’t about Bush. On Obama and Afghanistan, I said “seems.” And McCain just scares me.

          • LetItCollapse says:

            Yeah, I know. Iraq was a Bush product. I get that. But when Obama pulled out he knew it would throw Iraq into another civil war. He had a responsibility to Iraq. We (America) broke it. We (America) owned it until it was fixed. And it was OUR obligation to fix it since we broke it and promised them freedom when we invaded. I know that’s old school thinking – to do unto others as you would like them to do unto you – but I refuse to adjust my philosophy to adapt to an empty suit.

            10 to 1 that Obama leaves troops in Afghanistan and transfers the problem to the next POTUS. Obama is a proven liar many times over. If there’s one thing I’ve learned in life it’s that you don’t give a proven liar the benefit of the doubt.

            Obama and McCain are equally scary to me. Obama lies to the democrats as much as McCain lies to the republicans. Both are very dangerous men.

            Since you didn’t mention Syria I trust we see eye to eye on that one.

          • John Seiler says:

            This isn’t a foreign policy site. But the best thing America could do for all those countries is leave — and leave them alone.

          • LetItCollapse says:

            But I’ll give you this, John.

            Had McCain and Putin faced off over Syria I think McCain would be crazy enough to tell Putin to stuff it and attack Syria with US military hardware and risk a full-on thermo-nuclear war.

            Obama is just a weak-kneed sissy who bullies the small-frys and runs from the big dogs.

            Putin is smarter than Obama and McCain combined. But McCain is crazier than the entire Duma combined. I do agree that McCain’s a loose cannon. Something’s screwy upstairs. He’s not hitting on all cylinders. Perhaps from his POW time. Obama is crazy too – but just not in the same way. McCain might have given us a quick death. Obama prefers a slow one.

      • The Ted Steele Conceptual Abstraction Unit says:

        OK John — I stand corrected—- wait— you’re starting to sound reasonable? What gives??

      • eaglesglen says:

        I noticed that both Iraq and Afghanistan sit with Iraq in the middle.

  2. Queeg says:

    Now now now….goom bye ahhhh it.

    You have to feel sorry for the leader of the regulated world…he is wallowing possibly in self doubt or the phenomena: caught hand in cookie jar trauma, or something….who knows. Sort of a post Waterloo thingee…..

  3. LetItCollapse says:

    I think what people keep forgetting here is that the ObamaCare law was written by the health insurance companies and medical industry. We know that now. Thepoliticians were just their stooges who took their payoffs ($500M in 2012 alone) and approved the law. The insurance cancellations were baked into the cake as thelaw was written. Bait and switch. Cheaper catastophic medical coverage is now effectively banned for healthy individuals. Now the middle class producers must pay higher premiums for those getting free or heavily subsidized health care.Men are forced to purchase pregnancy coverage while women are covered for prostate treatments. The grandfather clause (if you had coverage prior to 3/2010 and there have been no changes to the terms of your coverage since 3/2010 you can keep it) is bogus too. The way actuarial science works with insurance it is flatly impossible for a health insurer not to make changes of any sort to the terms of coverage over
    time. And as soon as any sort of change is made your policy will get cancelled. So the end result is to eventually herd everyone into ObamaCare. The medical industry, the politicians and the mainstream media knew this in 2010 when ACA was signed into law. They just didn’t bother telling you. So if you think you’re going to keep your old insurance coverage I’ve got news for you.

    And since the medical industry and the overall medical wrote ACA they made sure they would profit handsomely. Through MLR ‘medical loss ratio’ guarantees that the corporations have a 100% certainty of realizing minimal profits and if those profits aren’t attained the taxpayer covers the difference. Do your research.

    ObamaCare is run like an extortion ring by the government, the insurance corporations and the medical companies while the taxpayers and consumers are the victims. Have you ever wondered why there are never any price lists in medical clinics or hospitals and that you only find out how much your treatment cost after you received it? Once I asked a receptionist at the doctor’s office how a certain procedure would cost. She looked at me as if I had one eyeball in the middle of my forehead. Would you shop at a grocery store that did not list item prices and just handed you the bill after your basket of goods was secretly rung up on the register? Have you ever wondered why that Tylenol pill at the hospital cost you $20 when you could buy 2 bottles of 100 Tylenol pills at the drug store at the same price?
    Have you ever wonder why our neighbors in other 1st world nations pay 1/4 to 1/2 of the cost that you pay for an American made branded pharmaceutical? Have you ever wondered why emergency treatment costs you ten times as much at a hospital than at an urgent care clinic?

    Back in the day people had hospitalization coverage but paid for their routine doctor and prescriptions out of pocket. And treatment costs were very affordable for the average household. That was back in the day when people used to ask the doctor’s assistant how much an office medical procedure cost and not get looked at like Cyclops.

    So ObamaCare really changed nothing in the healthcare racket except for who pays the bills. In other words, cost shifting. If you are an average middle class producer making an average or above-average salary – the bag just got handed to you. If you are super-rich or a pauper – you’ll do just fine.

    And now it’s no longer an option. You’re forced into it. And if you don’t pay into the system they come after you. One more freedom just got flushed.

    • eaglesglen says:

      American’s freedoms got overthrown,
      we slaves have to purchase our freedom each year.
      Why?
      Slaves only had to prchase their freedom one and remain free.

    • eaglesglen says:

      To LetitCollapse. Bank in the day of affordable med care was before the Dec. 1994 San Diego Sector border failure and zillions of ilegal aliens invaded from Mexico to do really simple stupid wor for 10 to 13 time what they make in Mexico and further south. Illegals bankrupted scores of hospital and other ECR’s; get hospital chid birth for free. Thank Clinton, Bush, Obama for bankrupting that many scores of (emergency) medical facilities.
      And, oh, Fed forgot to make Mexico pay for cleaning up the cost and mess Mexico made in the U.S.. How did our coward fed come to charge Americans for what is not Americans fault? And in direct violation of tort law?

  4. Ulysses Uhaul says:

    This site needs intervention….we finally wore out Poodle and Hondo and a couple other out of state carpetbaggers…..geesh….we have more depressed doomers!

    Be happy. Eat the government cheese.

  5. Queeg says:

    Obama lied and grandma —.

  6. Howard Epstein says:

    Obama lied, health insurance died.

  7. eaglesglen says:

    First I believe Obama is the greatest public liar in U.S. presidential history (evidence includes “Obama supporters will go hysterical over this well sourced list of 430 examples of his lying, lawbreaking, corruption, cronyism, etc.” at http://danfromsquirrelhill.wordpress.com/2013/08/15/obama-252/#comment-14050 .
    Next I remember when Obama said or PROMISED: (from Dan item 23)
    “No matter how we reform health care, we will keep this promise to the American people… If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.”
    or, (from Dan item 222)
    “Here is a guarantee that I’ve made… If you’ve got a doctor that you like, you will be able to keep your doctor.”
    or, (from Dan item 24)
    “I will not sign a plan that adds one dime to our deficits – either now or in the future. I will not sign it if it adds one dime to the deficit, now or in the future, period. And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize.”
    In March 2012, the Congressional Budget Office said that over the next decade, Obamacare would cost twice as much as what Obama had promised.
    It is time we get:
    a) what Obama promised (for which we voted)
    b) if Obama does not perform these promises we get
    b.1) make ObamaCare void for willful breach of contract;
    b.2) EACH AMERICAN receive (strict liabiliry) tort law financial damages from Obama for not performing what Obama PROMISED;
    b.3) when ObamaCare is void, consider replacements to ObamaCare.
    Finding out that something is going to cost TWICE as much as contracted for creates an Obama liability for Obama to pay for ObamaCare out of Obama’s own pocket, PERIOD. Not Americans fault, is NOT AS PROMISED and NOT contracted for. NO bait and switch, PERID.

    • LetitCollapse says:

      Eagle, if a businessman lied to his customers about a product or service once purchased like Obama lied to the American people about the ACA health care law that we are mandated to obey the authorities would prosecute him for consumer fraud, liquidate his business, turn him into a pauper and toss him in jail for multiple years. That is the ‘inequality under the law’ that’ve I’ve been harping on. The American people have just been informed that the government can openly lie to pass their laws that have tremendous impact on our lives and that we must submit. Do you know what term the dictionary uses to describe such a system?

  8. Ulysses Uhaul. says:

    Eagle….relax…..demand Brie for government cheese…all the taxes you pay….you deserve something!

    Perhaps, CWD doomers should have “venting sessions” at IHOP or at a FLYING A.

  9. Fred Mangels says:

    A little more on- topic: Guess what I got in the mail today? A letter from our County Medical Services Program (that’s like MediCal but paid for by the county) telling me my coverage will be cancelled come December 31. I’m supposed to see if I can get insured through Covered California, or qualify for MediCal.

    Not sure what that means, exactly, but it is funny that CMSP is telling people they’re being booted since they’re a government run health program.

  10. dedeedlo-do says:

    Coverd Ca did a poor roll out for any program which claims to want to recruit “younger” uninusred for the purpose of filling the social pool with more bodies to bring down the over all cost of healthcare for everyone, regardless of the origins of the Affordable Care Act and/or which “party” was for or against it, I will say that I myself, being self inusred since graduating high school, i got no thank you’s from anyone for doing that, I now pay astronomical premiums and I have used my plan just a few times, one of those times I was denied ER care, told I could sue the plan, but they would raise my rates in any case so better to shut up and pay the ER out of my own pocket … sure, I trust the Republicans to protect my right to choose but what about the right to access affordable healthcare with no poison pills being forced on me right at the time I need to use my coverage, where is the fairness in allowing this to be, what a poor investment of all of our time damaging the ablity for everyone to stay healthy, keep a job and pay there bils – ain’t that the goal for both Demo’s and Republo’s?
    I recall peior to WWII that adult males were so malnurished and sickly that the Gov’t had to roll out programs just to feed that generation so they could go on to be the Grand generation of there time and hold up the values which we all hold dearly here in the USA today .. how about investing in the health of the masses now so we all will be able to uphold the constituion with the best mind and body we could muster, or is that lost on both political parties, perhaps we need a third party and 1-payer inurance to clean up the social and politcal filth we are now froced to live in.

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