Health Policies Canceled in Latest Hurdle for Obamacare
By Alex Nussbaum - Oct
29, 2013 - Bloomberg
The Obamacare rollout is leading to the cancellation of hundreds of thousands
of health insurance plans nationwide, contradicting President Barack
Obamafs repeated pledge that people who like their coverage can keep it.
The notices started to arrive in recent weeks, compounding the political
headaches for the White House from the troubled start of its health 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, canft be sold after this year even if theyfre 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.
gI keep playing that over and over in my head: that you can keep your health
plan, period,h said Terri Flay, a Manassas, Virginia-area woman whose policy is
being canceled, referring to Obamafs pledge. gBut it isnft eperiod.f They put a
gun to my head saying that I have to pay more because I need the health-care
insurance.h
eSubstandard Policiesf
The health-care law eliminates gsubstandard policies that donft provide
minimum services,h said Jay
Carney, a White House spokesman, in response to the cancellations. The
g80-plus percenth of Americans with employer plans or covered by government
programs are unaffected.
The Obama administration faced another challenge to its overhaul today as Marilyn
Tavenner, who runs the U.S. Centers for Medicare and Medicaid Services, was
questioned at a House hearing about her agencyfs role in the delays involving
the website. Tomorrow, Kathleen
Sebelius, the health and human services secretary, will testify before
another House panel.
Obamafs 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 nationfs
48 million uninsured. While itfs unclear how many consumers face cancellation of
their insurance nationally, some individual carriers have released data.
Florida, California
Floridafs Blue Cross and Blue Shield, for instance, said about 300,000
members are affected while Californiafs 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 donft comply
with the law.
As many as 80 percent of people who donft 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, Virginia. 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 ggrandfatherh clause if they havenft changed
significantly since then.
In California, the insurance shift affects 2.5 percent of Kaiser Permanentefs
members, said Won Ha, a spokesman for the insurer. About 600,000 to 700,000
consumers with individual health plans will be affected, said Peter
V. Lee, the director of Covered California, the statefs health insurance
exchange. About one-third will receive subsidies or be eligible for Medi-Cal,
the statefs health coverage for the poor, he said.
House Hearing
Asked about the cancellations at todayfs House hearing, Tavenner said the
plans are inferior to the coverage being offered on the exchanges because they
donft provide the minimum benefits required by the law.
Representative Kevin
Brady, a Texas Republican, said his constituents are gfrightenedh by the
news that their policies wonft be renewed.
gThey are now being forced out of a health-care plan that they like,h Brady
told Tavenner at the hearing. gThe clock is ticking on a website thatfs broken.
Their health care isnft a glitch.h
Obama Criticism
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 Michiganfs Ross School of Business.
Instead, gthe first thing you get that affects you personally is that youfve
lost your health insurance,h Gordon said in a telephone interview. gThat
approach is going to backfire politically.h
Republicans seized on the issue, citing Obamafs statements that no one would
lose their current plan.
gProbably no pledge made to sell the bill was more disingenuous than this
one,h said Brendan
Buck, a spokesman for Republican House Speaker John
Boehner of Ohio, in an e-mail. gBut itfs more than just a broken promise; it
means a significantly higher health insurance bill for far too many.h
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. It sets a floor of gessential benefits,h such as
maternity and mental-health care, caps out-of-pocket costs and bans insurers
from denying coverage based on medical conditions, all features that can push up
the cost of policies.
Uninsured Group
The administration yesterday said half of eligible adults younger than 34,
the group most likely to be uninsured, can find coverage on the 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, Pennsylvania, the issue is all about getting
the same care from the same doctors. When he learned his policy was canceled his
reaction was gsurprise and disgust,h he said.
Hodge said he tried 10 times to get information about a new policy on Oct. 1,
the day the online federal exchange went live. Hefs still trying to figure out
his options, he said in a telephone interview.
gThe website is not very clear,h Hodge said. gIfm concerned about being able
to get affordable health care thatfs at least as good as what I had previously.h
New Coverage
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 wonft be able to keep them under a new plan.
gI had heard the repeated assurances by the president and people who work for
him that if you have health insurance, donft worry, youfll be able to keep your
health insurance,h Hodge said in a telephone interview. gWell, thatfs clearly
not true. I wasnft allowed to keep my health insurance.h
Amid the rush to open the exchange on time, the consumer gwas probably in
last place,h 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, Pennsylvania, 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.
Money Saver
gThe chance for me to save money and still have decent coverage, what my
basic needs would be, Ifm happy about that,h she said by telephone.
The impact on individual premiums will vary based on age, benefits and
location, Kaiserfs Ha said in an e-mail: gIn general, older beneficiaries will
tend to see lower rates or modest rate increases relative to their prior
coverage,h he wrote. gYounger beneficiaries, particularly those who had very
lean benefit plans, may have significant increases.h
Lee, of Covered
California, said he didnft think the presidentfs pledge was misleading,
though git 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 itfs changing for both the
uninsured and insured.h
While some people may pay more, theyfll find the added benefits mean its
health coverage they can rely on, Lee said.
Marketplace eReformsf
gFrom Day One, the Affordable Care Act reforms the individual insurance
market,h he said. gInsurers 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 eI donft want an airbag.f We say airbags
are a good idea.h
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.
gIf Americans conclude thatfs not the reality under the Affordable Care Act,
support will plummet,h he said.
Democratic pollster Geoff
Garin, who worked for Hillary
Clinton in 2008 and for advocates of the health law during congressional
debate, said Obamafs repeated reassurances addressed the anxieties of swing
voters whose support was critical to passage of the law.
The cancellations affect ga distinct minority of voters,h Garin said. By the
time of congressional elections next year, voters will judge the health-care law
based on how they judge their new coverage, regardless of the old plans, he
said.
gAt the end of the day, different is not the important unit of analysis,h he
said. gBetter or worse is the important unit of analysis and people will figure
that out in the next year or so.h
To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net
To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net