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Can a Reprieve and a Lawsuit Reverse Health Insurance Cancellations?

While California’s insurance commissioner forces a three-month delay for 115,000 cancellations, Obama administration says consumers are being “migrated” to better policies. 

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President Obama speaks on health care at Faneuil Hall in Boston on Oct. 30, 2013. (Jewel Samad/AFP/Getty Images)

As the number of health insurance cancellations continues to grow, surpassing 3.5 million by one count, an insurance company was forced to reverse course — at least temporarily.

Blue Shield of California, under threat from California Insurance Commissioner Dave Jones, confirmed Monday night that it would delay for up to three months 115,000 cancellations planned for Dec. 31, according to a report in the San Francisco Business Times.

It’s the first such report I’ve seen.

"We had a disagreement with the state over the 90-day notice we gave to ... policyholders, and we were faced with a lawsuit if we did not agree to their requirement for the 90-day extension," [Blue Shield spokesman Steve] Shivinsky clarified. He said 80,000 policyholders are being notified of the new course of action that regulators are requiring.

The deal has the look and feel of a political retreat by Democratic officeholders worried about the recent outcry about cancelled individual policies.

According to the Business Times, the insurance commissioner has scheduled a news conference for early today to announce the development.

Separately, the Los Angeles Times reported Monday night that two consumers are suing Anthem Blue Cross over their cancellations, alleging they were misled into giving up their health plans.

In separate lawsuits filed Monday, Paul Simon, 39, of Sherman Oaks, and Catherine Coker, 63, of Glendale sought to pin some of the blame on Anthem Blue Cross, a unit of WellPoint Inc.

The two plaintiffs are asking the courts to block any policy cancellations unless Anthem customers are allowed to switch back to their previous grandfathered health plans.

In their Los Angeles County Superior Court suits, Simon and Coker allege that Anthem pressured them in 2011 to give up their grandfathered status, a position that would have shielded them from changes under the healthcare law.

People who bought their individual policy before March 2010, when the healthcare law was enacted, and kept it in place aren’t affected by the current changes in the market. In California, nearly half of the 2 million individual policyholders are expected to lose their current coverage and must find a new plan by Jan. 1.

Anthem told the Times that it hadn’t seen the lawsuit and couldn’t comment on it.

The Associated Press reported Monday that the issue of insurance plan cancellations is becoming a major challenge for President Obama, who repeatedly pledged that consumers could keep their insurance plans if they liked them.

The Obama administration insists nobody will lose coverage as a result of cancellation notices going out to millions of people. At least 3.5 million Americans have been issued cancellations, but the exact number is unclear. Associated Press checks find that data is unavailable in a half the states.

Mainly they are people who buy directly from an insurer, instead of having workplace coverage. Officials say these consumers aren’t getting “canceled” but “transitioned” or “migrated” to better plans because their current coverage doesn’t meet minimum standards. They won’t have to go uninsured, and some could save a lot if they qualify for the law’s tax credits.

Speaking in Boston’s historic Faneuil Hall this past week, Obama said the problem is limited to fewer than 5 percent of Americans “who’ve got cut-rate plans that don’t offer real financial protection in the event of a serious illness or an accident.”

But in a nation of more than 300 million, 5 percent is a big number - about 15 million people. Among them are Ian and Sara Hodge of Lancaster, Pa., in their early 60s and paying $1,041 a month for a policy.

It’ll be worth watching the legal system and state insurance departments as cancellation notices continue to arrive.

This article is part of an ongoing investigation:
Obamacare and You

Obamacare and You

The Rollout of the Affordable Care Act has been marred by glitches and political opposition.

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