Obama administration knew millions could not keep their
health insurance
By Lisa Myers and Hannah Rappleye, NBC News
22 Oct 2013 - NBC News
President Obama repeatedly assured Americans that after the Affordable Care
Act became law, people who liked their health insurance would be able to keep
it. But millions of Americans are getting or are about to get cancellation
letters for their health insurance under Obamacare, say experts, and the Obama
administration has known that for at least three years.
Four sources deeply involved in the Affordable Care Act tell NBC News that 50
to 75 percent of the 14 million consumers who buy their insurance individually
can expect to receive a gcancellationh letter or the equivalent over the next
year because their existing policies donft meet the standards mandated by the
new health care law. One expert predicts that number could reach as high as 80
percent. And all say that many of those forced to buy pricier new policies will
experience gsticker shock.h
None of this should come as a shock to the Obama administration. The law
states that policies in effect as of March 23, 2010 will be ggrandfathered,h
meaning consumers can keep those policies even though they donft meet
requirements of the new health care law. But the Department of Health and Human
Services then wrote regulations that narrowed that provision, by saying that if
any part of a policy was significantly changed since that date -- the
deductible, co-pay, or benefits, for example -- the policy would not be
grandfathered.
Buried in Obamacare regulations from July 2010 is an estimate that because of
normal turnover in the individual insurance market, g40 to 67 percenth of
customers will not be able to keep their policy. And because many policies will
have been changed since the key date, gthe percentage of individual market
policies losing grandfather status in a given year exceeds the 40 to 67 percent
range.h
That means the administration knew that more than 40 to 67 percent of those
in the individual market would not be able to keep their plans, even if they
liked them.
Yet President Obama, who had promised in 2009, gif you like your health plan,
you will be able to keep your health plan,h was still saying in 2012, gIf [you]
already have health insurance, you will keep your health insurance.h
gThis says that when they made the promise, they knew half the people in this
market outright couldnft keep what they had and then they wrote the rules so
that others couldnft make it either,h said Robert Laszewski, of Health
Policy and Strategy Associates, a consultant who works for health industry
firms. Laszewski estimates that 80 percent of those in the individual market
will not be able to keep their current policies and will have to buy insurance
that meets requirements of the new law, which generally requires a richer
package of benefits than most policies today.
The White House does not dispute that many in the individual market will lose
their current coverage, but argues they will be offered better coverage in its
place, and that many will get tax subsidies that would offset any increased
costs.
gOne of the main goals of the law is to ensure that people have insurance
they can rely on – that doesnft discriminate or charge more based on
pre-existing conditions. The consumers who are getting notices are in
plans that do not provide all these protections – but in the vast majority of
cases, those same insurers will automatically shift their enrollees to a plan
that provides new consumer protections and, for nearly half of individual market
enrollees, discounts through premium tax credits,h said White House spokesperson
Jessica Santillo.
gNothing in the Affordable Care Act forces people out of their health plans:
The law allows plans that covered people at the time the law was enacted to
continue to offer that same coverage to the same enrollees – nothing has changed
and that coverage can continue into 2014,h she said.
The Affordable Care Act will not affect most traditional employer-based
plans, but many of those who purchased insurance policies on their own will see
higher premiums. This is in part due to the 10 essential health benefits
insurance providers are now required to include. NBC's Peter Alexander reports.
Individual insurance plans with low premiums often lack basic benefits, such
as prescription drug coverage, or carry high deductibles and out-of-pocket
costs. The Affordable Care Act requires all companies to offer more benefits,
such as mental health care, and also bars companies from denying coverage for
preexisting conditions.
Today, White House spokesman Jay Carney was asked about the presidentfs
promise that consumers would be able to keep their health care. gWhat the
president said and what everybody said all along is that there are going to be
changes brought about by the Affordable Care Act to create minimum standards of
coverage, minimum services that every insurance plan has to provide,h Carney
said. gSo it's true that there are existing healthcare plans on the individual
market that don't meet those minimum standards and therefore do not qualify for
the Affordable Care Act.h
Other experts said that most consumers in the individual market will not be
able to keep their policies. Nancy Thompson, senior vice president of CBIZ
Benefits, which helps companies manage their employee benefits, says numbers in
this market are hard to pin down, but that data from states and carriers
suggests ganywhere from 50 to 75 percenth of individual policy holders will get
cancellation letters. Kansas Insurance Commissioner Sandy Praeger, who chairs
the health committee of the National Association of Insurance Commissioners,
says that estimate is gprobably about right.h She added that a few states are
asking insurance companies to cancel and replace policies, rather than just
amend them, to avoid confusion.
A spokesman for America's Health Plans says there are no precise numbers on
how many will receive cancellations letters or get notices that their current
policies donft meet ACA standards. In both cases, consumers will not be able to
keep their current coverage.
Those getting the cancellation letters are often shocked and unhappy.
George Schwab, 62, of North Carolina, said he was "perfectly happy" with his
plan from Blue Cross Blue Shield, which also insured his wife for a $228 monthly
premium. But this past September, he was surprised to receive a letter saying
his policy was no longer available. The "comparable" plan the insurance company
offered him carried a $1,208 monthly premium and a $5,500 deductible.
And the best option hefs found on the exchange so far offered a 415 percent
jump in premium, to $948 a month.
"The deductible is less," he said, "But the plan doesn't meet my needs. Its
unaffordable."
"I'm sitting here looking at this, thinking we ought to just pay the fine and
just get insurance when we're sick," Schwab added. "Everybody's worried about
whether the website works or not, but that's fixable. That's just the tip of the
iceberg. This stuff isn't fixable."
Heather Goldwater, 38, of
South Carolina, is raising a new baby while running her own PR firm. She said
she received a letter last July from Cigna, her insurance company, that said the
company would no longer offer her individual plan, and promised to send a letter
by October offering a comparable option. So far, she hasn't received
anything.
"I'm completely overwhelmed with a six-month-old
and a business,h said Goldwater. gThe last thing I can do is spend hours poring
over a website that isn't working, trying to wrap my head around this entire
health care overhaul."
Goldwater said she supports the new law and is grateful for provisions
helping folks like her with pre-existing conditions, but she worries she wonft
be able to afford the new insurance, which is expected to cost more because it
has more benefits. "I'm jealous of people who have really good health
insurance," she said. "It's people like me who are stuck in the middle who are
going to get screwed."
Richard Helgren, a Lansing, Mich.,
retiree, said he was girateh when he received a letter informing him that his
wife Amy's $559 a month health plan was being changed because of the law. The
plan the insurer offered raised his deductible from $0 to $2,500, and the
company gave him 17 days to decide.
The higher costs spooked him and his wife, who have painstakingly planned for
their retirement years. "Every dollar we didn't plan for erodes our standard of
living," Helgren said.
Ulltimately, though Helgren opted not to shop through the ACA exchanges, he
was able to apply for a good plan with a slightly lower premium through an
insurance agent.
He said he never believed President Obamafs promise that people would be able
to keep their current plans.
"I heard him only about a thousand times," he said. "I didn't believe him
when he said it though because there was just no way that was going to happen.
They wrote the regulations so strictly that none of the old polices can
grandfather."
For months, Laszewski has warned that some consumers will face sticker shock.
He recently got his own notice that he and his wife cannot keep their current
policy, which he described as one of the best, so-called "Cadillac" plans
offered for 2013. Now, he said, the best comparable plan he found for 2014 has a
smaller doctor network, larger out-of-pocket costs, and a 66 percent premium
increase.
gMr. President, I like the coverage I have," Laszweski said. "It is the best
health insurance policy you can buy."