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November 20, 2013
Viewpoints: Allow a health policy grace period

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(Nov. 20 — By Dave Jones, Special to The Bee)

President Barack Obama is not undermining his signature domestic policy achievement - the Affordable Care Act - by calling on states and health insurers to allow existing policyholders the option to renew their health insurance for one year, as The Bee's editorial board claims ("California should stiffen its resolve on health care," Editorials, Nov. 20).

As a supporter of the ACA, I agree that allowing Californians to keep their health insurance won't undermine implementation of the ACA.

The ACA has provided new benefits to millions of Californians. Last week, Obama asked health insurers to allow individual policyholders to renew their existing policies. The president took this action after hearing from Americans whose insurers sent them cancellation notices for existing coverage.

Neither state nor federal law, including the ACA, required these Dec. 31 cancellations. Consumers are understandably upset because they were told if they liked their health insurance, they could keep it.

More than 1 million Californians are receiving cancellation notices from insurers. Although I oppose these cancellations, there is no law that provides the authority to stop them.

Covered California adopted a contractual provision with 11 health insurers requiring them to cancel their individual policies by Dec. 31. This provision impedes insurers' ability to honor the president's request.

I asked Covered California to rescind this provision. Covered California's board meets today to decide whether to rescind this provision.

Giving policyholders the option to renew policies will not harm the exchange or the ACA in California, but could in fact drive more people to shop in the exchange.

First, it's not true that all the existing health insurance policies are junk insurance. California has strong coverage mandates. This is why so many people want to keep their existing policies and doctors.

Second, cancellation notices sent to policyholders steer them into insurance products outside the exchange, depriving the policyholder of the federal premium subsidy. Some cancellation notices steer people toward less robust coverage than the policyholder currently enjoys. Consumers should have more time to figure out what makes the most sense for their families.

Third, allowing existing policyholders to renew will not undermine the risk pool. The ACA has robust features to protect health insurers and offset financial impacts by mitigating the risk to health insurers of having a disproportionate share of sick people in the risk pool in 2014.

Finally, Covered California has estimated that 400,000 existing policyholders are eligible for subsidies. Even if allowed to renew their current coverage, many will purchase new insurance through the exchange because of the subsidy.

Obama called on states and health insurers to allow renewals. I agree. Covered California should release health insurers from their contract provision and allow them to renew their existing policyholders for one year, so that health insurers can comply with the president's request.

Dave Jones is California insurance commissioner.

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