March 5, 2014:
State Sen. Ted Gaines is suing Covered California over December cancellation of insurance policies that do not meet federal health reform standards.
Urged in November by the Obama Administration to allow a one-year delay in noncompliant plan cancellations, the board at Covered California voted to go ahead.
The lawsuit, filed Tuesday in Los Angeles County Superior Court, alleges more than 900,00 Californians have had their health plans cancelled in violation of California and federal law — and millions more will be affected as noncompliant employer-provided insurance plans face cancellation in the future. Gaines seeks a court order that prohibits Covered California from requiring health insurers to cancel noncompliant plans.
The complaint also targets Covered California spending on outreach, marketing and advertising that allegedly includes more than $1.3 million on an infomercial starring exercise guru Richard Simmons. The lawsuit seeks more transparency and public accountability on spending.
“Dave Jones has failed to protect California as insurance commissioner,” Gaines said in a media call Wednesday to announce the lawsuit. “Implementation of the ACA has been a mess. It failed to protect 900,000 Californians. Millions of Californians were happy with their health plans and wanted to keep them. Millions more will have their policies cancelled as well.”
Gaines, a Republican from Roseville, is running for state insurance commissioner. Jones, in fact, blasted Covered California in November over its decision to stay the course on plan cancellations. His office had not seen the lawsuit Wednesday and declined comment.
Likewise, Covered California also declined comment.
“We haven’t seen the documents at this time, so we are not commenting,” Covered California spokesman Dana Howard said in a statement.
The issue of whether to let insurers keep selling health plans that don’t meet Affordable Care Act standards hit the national news Wednesday for another reason: Senior health officials announced new policy that allows individuals and small business owners to keep noncompliant plans for two more years.
The change stems from push back on the policy of requiring all plans to meet minimum benefit standards imposed by the ACA. The purpose is to improve coverage and spread risk more broadly by getting rid of plans with high deductibles and less coverage than most policyholders think.
The problem: Although many people with these policies qualify for subsidies and can get a better deal through health insurance exchanges, others will ultimately have to pick a new plan and pay more than they did before.