Trace Gallagher at Fox: Insurance Cos. in Calif. Had to Cancel Non-Compliant Policies to Be in State Exchange

November 6th, 2013 3:41 PM

On Megyn Kelly's Fox News Channel show last night, reporter Trace Gallagher countered the Obama adminstration's attack on Stage Four cancer patient Edie Littlefield Sundby, whose Sunday evening Wall Street Journal op-ed on her individual plan's termination in California has garnered major attention. Ms. Sundby wrote that she has not found an available insurance plan option which will cover visits and treatments from both her current oncologist and her current primary care doctor.

In the process of addressing the White House's reference to a far-left Think Progress report which tried to pin the blame on Ms. Sundby's carrier — as if that addresses the obvious failures of her Obamacare options, which it obviously doesn't — Gallagher dropped a bombshell. Covered California, the formerly Golden State's Obamacare exchange, mandated as a condition of participation that any insurance company wishing to offer plans there had to cancel all existing individual policies in the state which did not qualify under Obamacare's strictures, i.e., they could not have any grandfathered plans (video is here full transcript is here; bolds are mine):

MEGYN KELLY, HOST: Well, in what is now a national fire storm over millions of people losing their health care coverage due to the new ObamaCare rules, one story has become the focus of a lot of questions.


Tonight, new developments on Edie Sundby, a stage four cancer patient about to lose the health plan that helped her survive all these years, and whose op-ed in the Wall Street Journal earned her a direct rebuke from the White House. Trace Gallagher live from our West Coast newsroom. Trace.

TRACE GALLAGHER, FOX NEWS CORRESPONDENT: And Megyn, Edie Sundby has said all along, she doesn't want to pick sides, the reason she wrote that article for The Wall Street Journal is because she was disappointed, writing in part quoting here, "What happened to the president's promise? Thanks to the law, I have been forced to give up a world class health plan. The exchange would force me to give-up a world class physician."

So, the White House is now challenging her account. Senior adviser Dan Pfeiffer directing people to a left-leaning blog called Think Progress, and a story called, "The Real Reason the Cancer Patient Lost Her Insurance."

The story says in part quoting here, "But Sundby shouldn't blame reform, United Health Care dropped her coverage because they have struggled to compete in California's individual health care market for years.

It is true United Health Care only has a small share of California's insurance market, but they left out that United Health Care is the biggest health insurance company in the country. And the reason they pulled out of California is the same reason they're only joining exchanges in a handful of states. They believe the exchanges will attract too many sick people and not enough healthy people." The CEO told his investors, quoting here, "They'll be accessed by those who have had a pent-up appetite for insurance. And we are approaching them with some degree of caution."

And now we know, Megyn, that to participate in the California exchange then qualify for those federal subsidies, insurance companies had to agree to cancel their plans that do not qualify under ObamaCare. So when you hear this phrase that the insurance companies are voluntarily and choosing to cancel these, it is not true, at least in California. And by all of our research, Edie Sundby lost her health insurance and she lost her doctors because of the Affordable Care Act.

KELLY: Can you repeat that last part about California and what they told the insurance companies?

GALLAGHER: California struck a deal and the insurance companies have confirmed this, that to participate in the California exchange and qualify for the federal subsidies, the insurance companies had to agree to cancel the plans that did not qualify under ObamaCare, which we have seen all over the country. We know in California for a fact that those insurance companies agreed. And that is why they're canceling the plans that do not qualify.

KELLY: That is unbelievable. I mean, that is an explicit deal to break the president's promise, I mean, not even arguably accidental. Trace, thank you.

In other words, Covered California expressly prohibited any and all grandfathering of individual plans as a condition for becoming an exhange participant — regardless of whether those individual plans would otherwise successfully have jumped through Kathleen Sebelius's grandfathering hoops.

The heavyhanded Covered California tactic has one of two probable causes (or perhaps both).

The first may be sheer ideological hostility towards insurance companies, an outlook which certainly can't be ruled out in Jerry Brown's California.

The second is Covered California's financial viability. If "too many" individual policies were allowed to remain, there might not be enough relatively healthy, reasonably well-off participants to offset the hordes of uninsured who will pay little to nothing in net premiums. (There still may not be enough anyway.)

Now in theory, since United Health Care wasn't participating in Covered California, it could have stayed in the individual market. But the exchange caused that market to radically shrink to almost nothing. So the company, which after all has to be a responsible steward for its shareholders, made a business decision driven by Obamacare and Covered California's aggressive Obamacare posture that the fixed costs involved in remaining present in a dying market weren't worth it. An Investor's Business Daily editorial predicted the end of the individual private insurance market four years ago. In California, IBD has been proven right.

So what will the White House, Jerry Brown's administration, and those in the leftist fever swamps (but I repeat myself) have to say in regards to these damning, inconvenient facts? The guess here is that we'll never hear a peep out of any of 'em.

Cross-posted at