By Lewis Krauskopf and Caroline Humer
(Reuters) - California's new health exchange will not allow canceled policies to extend past the end of the year, defying President Barack Obama's effort to repair his pledge that people can keep their current plans.
The announcement on Thursday by the most populous U.S. state, an early supporter of Obama's Affordable Care Act, marked the latest state to reject the president's fix, which he announced last week after taking political fire for not keeping his promise to allow people to keep their plans if they like them.
Several million people stand to have their individual health insurance canceled at some point in 2014 because their plans do not comply with new requirements, such as coverage for mental health treatment and maternity care.
California also said that nearly 80,000 people had signed up for private plans through its state-run marketplace, showing momentum with its sign-ups at a time the federally run website continues to struggle with technical problems.
Obama has left it up to individual states to decide whether to allow his policy cancellation fix. State insurance commissioners met with the president at the White House on Wednesday and expressed concerns that his effort to stem the cancellations could lead to higher premiums.
Under the Affordable Care Act, known as Obamacare, new state marketplaces offering subsidized coverage are expected to enroll an estimated 7 million Americans for coverage next year.
California is one of 14 states that built its own insurance exchange. Such state-run exchanges in general have been working fairly smoothly since enrollment began Oct 1.
By contrast, HealthCare.gov, the federal website that is supposed to sell insurance with government subsidies in 36 states, has turned many people away with technical problems. During October, only about 27,000 people enrolled through the federally run marketplace.
Like California, other states running their own exchanges have decided against the existing-plan fix, including Minnesota, Nevada, Vermont, Rhode Island, Massachusetts, New York and Washington.
Of other states running their own exchanges, Maryland has said insurers can only do these fixes between now and midnight on January 1. Hawaii and Oregon, which have had website issues since their launches, plus Colorado and Kentucky, have all said they will extend policies. Connecticut is still deciding and Washington D.C. is also on the fence.
Florida, Missouri, Ohio, Alabama, Tennessee, North Carolina and South Carolina, which all depend on HealthCare.gov, have all said they will allow insurers to extend policies next year, which will allow plans to stay in place until 2015. Other states relying on the federal site, such as Pennsylvania and Michigan, remain undecided.
DIVIDED IN CALIFORNIA
In many states, the insurance commissioners are making the decisions about policy renewals.
But in California, although the state's insurance commissioner, Dave Jones, strongly favored Obama's fix, he said he needed the state's new insurance exchange, Covered California, to release insurers from contractual obligations that they cancel policies that did not comply with the law by year end.
Covered California's board decided on Thursday not to allow people to stay in non-compliant plans beyond the end of the year.
"Covered California has spent a lot of time structuring a marketplace that's best for consumers," the exchange's executive director, Peter Lee, told the board before it voted on Thursday.
On Thursday, Jones called Covered California's decision a "disservice to California's consumers," but said there was nothing more he could do.
(Additional reporting by Will Dunham in Washington and Deena Beasley in Los Angeles; Editing by Leslie Adler and Tim Dobbyn)