California officials rebuffed President Barack Obama Thursday and voted against letting insurers in the state reinstate canceled health policies, in a move that highlighted internal tensions among Democrats about the health law's direction.
Mr. Obama proposed last week that insurers be allowed to restore the canceled policies, hoping to quiet a furor that broke out when it became clear that millions of Americans who bought individual coverage were losing it.
But some supporters of the president's Affordable Care Act said allowing the old policies to stay would harm the law's prospects for success. Meeting Thursday, the board of California's health-insurance exchange unanimously decided to stick to its stance blocking older policies that don't meet the law's coverage requirements. It won swift praise from some state lawmakers.
A counselor helps a family sign up for insurance on California's exchange in Sacramento this month.Associated Press
"Bucking political pressure and staying the course is the smartest way to keep health insurance costs down and maintain the consumer protections that are at the heart of the Affordable Care Act," said Assembly Speaker John Pérez, a Los Angeles Democrat. "Today's decision was the right thing to do, and sends a powerful signal to the rest of the nation since California is leading in the implementation of the Affordable Care Act."
The dilemma for Democrats: If additional states go California's way, more people who may have preferred their old plans will lose them, despite the president's promise, now withdrawn, that the health law would allow people to keep plans they liked.
Among states with Democratic governors, nine including California have said they won't allow carriers to renew the plans in 2014, seven have said they will and four were still deciding as of Thursday.
States supporting an extension of the nonconforming plans have said they want to minimize disruption and confusion for people who may be struggling to find alternative coverage, especially when the federal HealthCare.gov website and some state websites aren't functioning well.
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In California, state insurance commissioner Dave Jones, an elected Democrat, had led the fight to restore canceled policies. "I think it is a definite rebuke to the president and others who have asked that health insurers be given the opportunity to extend their existing polices, but, more importantly, it is a disservice to California policyholders," he said after the vote Thursday.
Democrats who aren't going along with the president argue that their stance will actually serve Mr. Obama's signature law better by ensuring a stronger flow of customers into the new health-insurance exchanges. Actuaries say those with the older plans are generally healthy and could help balance the population of the exchanges in the crucial first year of operation.
Mr. Jones was up against Peter Lee, who came back to his home state to run the biggest of the state health-insurance exchanges after a stint in the Obama administration.
"Elected officials" such as Mr. Jones "are looking at the political arithmetic that an extension would be popular, and that cutting people off is highly unpopular," said John J. Pitney Jr. , professor of politics at Claremont McKenna College. By contrast, he said, administrators such as Mr. Lee "are looking at the policy arithmetic."
The state exchange, called Covered California, had required insurance companies to cancel old policies as a condition of participating. Thursday's vote was about whether to revoke that condition, and the Covered California board decided to stick to its policy.
The board appeared swayed on Thursday by advocates who said they had to push ahead to ensure more people got better insurance. Those advocates viewed the older policies, which may not have included benefits such as free preventive care, as substandard.
"This is one hot mess," said Brenda Darcel Lee, executive director of the California Black Health Network, a group that advocates for better health care for African-Americans. Ms. Lee told board members at a public-comment section of their meeting Thursday that if California changed course, her organization would be challenged to explain what had happened.
The California exchange has been able to boast that in its first month, it enrolled more people in private health plans than in the 36 states combined served by the troubled federal HealthCare.gov website. On Thursday, the exchange said it enrolled some 2,700 people per day in private coverage in the second week of November, nearly four times the figure shortly after the Oct. 1 launch.
While California's figures so far are just a tiny fraction of the some seven million people in the state who lack health insurance, exchange officials said they had momentum going that could have been undercut if the state let people retain their old policies.
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