Obamacare

You Can Keep Your Health Insurance Under Obamacare? Not So Much.

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Obamacare Exchange
U.S. Government

President Obama (in)famously said, "If you like your health care plan, you can keep your health care plan" under the Affordable Care Act. As it turns out, not so much. Hundreds of thousands of Americans, it turns out, are receiving letters telling them that their existing coverage just isn't good enough to satisfy the strict rquirements of the Obamacare law, and that they'll have to sign up for new policies. Those new policies come with new stipulations, and new price tags. Which is to say, it doesn't matter if you like your health care plan, since you probably can't keep it.

From Kaiser Health News:

Health plans are sending hundreds of thousands of cancellation letters to people who buy their own coverage, frustrating some consumers who want to keep what they have and forcing others to buy more costly policies.

The main reason insurers offer is that the policies fall short of what the Affordable Care Act requires starting Jan. 1. Most are ending policies sold after the law passed in March 2010.  At least a few are cancelling plans sold to people with pre-existing medical conditions.

What share of existing plans are getting the heave-ho? It varies, but a lot. "

Florida Blue, for example, is terminating about 300,000 policies, about 80 percent of its individual policies in the state. Kaiser Permanente in California has sent notices to 160,000 people – about half of its individual business in the state.  Insurer Highmark in Pittsburgh is dropping about 20 percent of its individual market customers, while Independence Blue Cross, the major insurer in Philadelphia, is dropping about 45 percent.

In fact, writes, Bob Laszewski, of Health Policy and Strategy Associates, LLC, a health policy consulting firm, the vast majority of individual plans don't make the cut under new requirements, promises to the contrary notwithstanding:

The U.S. individual health insurance market currently totals about 19 million people. Because the Obama administration's regulations on grandfathering existing plans were so stringent about 85% of those, 16 million, are not grandfathered and must comply with Obamacare at their next renewal. The rules are very complex. For example, if you had an individual plan in March of 2010 when the law was passed and you only increased the deductible from $1,000 to $1,500 in the years since, your plan has lost its grandfather status and it will no longer be available to you when it would have renewed in 2014.

These 16 million people are now receiving letters from their carriers saying they are losing their current coverage and must re-enroll in order to avoid a break in coverage and comply with the new health law's benefit mandates––the vast majority by January 1. Most of these will be seeing some pretty big rate increases.

Grandfathered plans are those that existed before March 23, 2010 and "stayed basically the same." They're still subject to tight regulations (though not quite the same as newer plans) and many seem to fall afoul of the "stayed basically the same" requirement. A couple of tweaks, and subscribers get a letter. Along with those letters, and the new policies to which they point customers, are new bills. Again from Kaiser:

Some receiving cancellations say it looks like their costs will go up, despite studies projecting that about half of all enrollees will get income-based subsidies.

Kris Malean, 56, lives outside Seattle, and has a health policy that costs $390 a month with a $2,500 deductible and a $10,000 in potential out-of-pocket costs for such things as doctor visits, drug costs or hospital care.

As a replacement, Regence BlueShield is offering her a plan for $79 more a month with a deductible twice as large as what she pays now, but which limits her potential out-of-pocket costs to $6,250 a year, including the deductible.

"My impression was …there would be a lot more choice, driving some of the rates down," said Malean, who does not believe she is eligible for a subsidy.

Regence spokeswoman Rachelle Cunningham said the new plans offer consumers broader benefits, which "in many cases translate into higher costs."

"The arithmetic is inescapable," said Patrick Johnston, chief executive officer of the California Association of Health Plans. Costs must be spread, so while some consumers will see their premiums drop, others will pay more -- "no matter what people in Washington say."

The new and unwilling health plan shoppers are, of course, funneled by their law-mandated letters of cancellation to the health exchanges that seem to be experiencing just a touch of difficulty at the moment. Once there, they'll find in most cases that premiums are rising dramatically, ad that access to doctors and hospitals has been reduced.

Enjoy your affordable care! Hope you "like your health care plan!"