Policies canceled in latest hurdle for health care law
The rollout of the Affordable Care Act is leading to the cancellation of hundreds of thousands of health insurance plans nationwide, contradicting President Obama’s repeated pledge that people who like their coverage can keep it.
The cancellation notices started to arrive in recent weeks, compounding the political headaches for the White House from the troubled start of its health insurance exchange, the federal website created to give millions of people access to new plans by Jan. 1.
The cancellations come as a result of the 2010 Patient Protection and Affordable Care Act, which says that health insurance policies that fail to offer added benefits, such as prescription drug coverage and free preventive care, can’t be sold after this year even if they’re cheaper. With the online site expected to face difficulties through November, Americans may have only weeks to find replacement coverage, and many may end up paying higher premiums.
“I keep playing that over and over in my head: that you can keep your health plan, period,” said Terri Flay, a Manassas, Va., woman whose policy is being canceled, referring to Obama’s pledge. “But it isn’t ‘period.’ They put a gun to my head saying that I have to pay more because I need the health care insurance.”
The health care law eliminates “substandard policies that don’t provide minimum services,” said Jay Carney, a White House spokesman, in response to the cancellations. The “80-plus percent” of Americans with employer plans or covered by government programs are unaffected.
Obama’s oft-repeated pledge was a central selling point of his health care overhaul, aimed at calming consumers who feared being forced to give up policies and doctors they liked as the program expanded coverage to many of the nation’s 48 million uninsured.
While it’s unclear how many consumers face cancellation of their insurance nationally, some individual carriers have released data.
Florida’s Blue Cross Blue Shield, for instance, said about 300,000 members are affected while California’s Blue Shield and Oakland-based Kaiser Permanente will withdraw policies for a combined 280,000. Highmark Health Services of Pittsburgh said 40,000 customers will need to find new plans. CareFirst Blue Cross Blue Shield sent notices to more than 70,000 customers in Maryland, Washington, D.C., and Virginia that their current plans don’t comply with the law.
As many as 80 percent of people who don’t have a company-hosted plan or insurance through the Medicare or Medicaid government programs may have to find new health coverage, said Robert Laszewski, an insurance-industry consultant in Arlington, Va. About 19 million people are included in this market.
Plans bought before March 23, 2010, when the law known as Obamacare was enacted, can stay in effect under a “grandfather” clause.
In California, the insurance shift will affect about 2.5 percent of Kaiser Permanente’s members, said Won Ha, a spokesman for the insurer. About 600,000 to 700,000 consumers statewide who have individual health plans will be affected, said Peter V. Lee, the director of Covered California, the state’s health insurance exchange. About one-third will receive government subsidies to pay for the new plans or be eligible for Medi-Cal, the state’s health coverage for the poor, he said.
Federal officials should have worked more closely with insurers to better manage the long-coming shift to new coverage, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.
Instead, “the first thing you get that affects you personally is that you’ve lost your health insurance,” Gordon said in a telephone interview. “That approach is going to backfire politically.”
Republicans seized on the issue, citing Obama’s statements that no one would lose their current plan.
“Probably no pledge made to sell the bill was more disingenuous than this one,” said Brendan Buck, a spokesman for Republican House Speaker John Boehner of Ohio, in an email. “But it’s more than just a broken promise; it means a significantly higher health insurance bill for far too many.”
The law requires all Americans to be covered next year or pay a penalty. Those who want plans that begin Jan. 1 must enroll by Dec. 15 – either by mail, phone or the exchanges.
The administration yesterday said half of eligible adults younger than 34, the group most likely to be uninsured, can find coverage on the federal exchange for $50 a month or less. One million more may qualify for expanded coverage under Medicaid, according to a report by the Department of Health and Human Services.
For Ian Hodge, 63, of Lancaster, Pa., the issue is all about getting the same care from the same doctors. When he learned his policy was canceled, his reaction was “surprise and disgust,” he said.
Hodge said he tried 10 times to get information about a new policy Oct. 1, the day the online federal exchange went live. He’s still trying to figure out his options, he said in a telephone interview.
“The website is not very clear,” Hodge said. “I’m concerned about being able to get affordable health care that’s at least as good as what I had previously.”
Hodge and his wife, Sara, who also is 63, paid $1,041.85 a month for a plan offered by Highmark, he said. They like the care, their hospital and the doctors, and they worry they won’t be able to keep them under a new plan.
“I had heard the repeated assurances by the president and people who work for him that if you have health insurance, don’t worry, you’ll be able to keep your health insurance,” Hodge said in a telephone interview. “Well, that’s clearly not true. I wasn’t allowed to keep my health insurance.”
Amid the rush to open the exchange on time, the consumer “was probably in last place,” on the priority list for the administration, said Marc Pierce, the founder of Chicago-based Stonegate Advisors, a communications consultant to insurers.
Not all consumers will be losers under the new system. Barbara Wynkoop, 62, of Trexlertown, Pa., said she expects to find a cheaper plan on the exchange, thanks to subsidies and new coverage for her cholesterol medication. She pays $278 a month now for a policy that Capital BlueCross of Harrisburg plans to discontinue.
“The chance for me to save money and still have decent coverage, what my basic needs would be, I’m happy about that,” she said by telephone.
The impact on individual premiums will vary based on age, benefits and location, Kaiser’s Ha said in an email: “In general, older beneficiaries will tend to see lower rates or modest rate increases relative to their prior coverage,” he wrote. “Younger beneficiaries, particularly those who had very lean benefit plans, may have significant increases.”
Lee, of Covered California, said he didn’t think the president’s pledge was misleading, though “it was overly broad. The reality of the Affordable Care Act is if you have employer coverage, you keep it. If you have Medicare, you keep it. The individual market is being dramatically reformed and it’s changing for both the uninsured and insured.”
While some people may pay more, they’ll find the added benefits mean it’s health coverage they can rely on, Lee said.
“From Day One, the Affordable Care Act reforms the individual insurance market,” he said. “Insurers have to take everyone, which for some people may raise the rates a little bit. But it means they have security going forward. You might want to be a risk taker and say ‘I don’t want an airbag.’ We say airbags are a good idea.”
Obama risks a backlash over the cancellations if Americans think he broke his promise they could keep their coverage, said Bill McInturff, a Republican pollster who consulted for President George W. Bush.
“If Americans conclude that’s not the reality under the Affordable Care Act, support will plummet,” he said.
Democratic pollster Geoff Garin, who worked for Hillary Clinton in 2008 and for advocates of the health law during congressional debate, said Obama’s repeated reassurances addressed the anxieties of swing voters whose support was critical to passage of the law.
The cancellations affect “a distinct minority of voters,” Garin said. By the time of congressional elections next year, voters will judge the health care law based on how they feel about their new coverage, regardless of the old, he said.
“At the end of the day, different is not the important unit of analysis,” he said. “Better or worse is the important unit of analysis and people will figure that out in the next year or so.”