Archive | Health Care Bill Impact on Business

California votes against extending canceled health policies

Spurning President Obama’s plan for canceled policies, California’s health insurance exchange voted against any extension for about 1 million policyholders in the state. The five-member board of the exchange voted unanimously to keep its current requirement that insurers terminate most individual policies Dec. 31 because they don’t meet all the requirements of the Affordable Care Act.

  • The decision ends a weeklong drama over what would happen for policyholders who will lose their existing coverage at year-end and face finding replacement insurance that may cost them substantially more in many instances. Covered California, the state exchange, considered allowing renewals into 2014 as Obama proposed or a short-term extension through March to give people more time to shop.
  • But state leaders ultimately rejected those options. They expressed concerns about further confusing consumers and worried that widespread renewals could keep too many healthy customers out of the broader risk pool that will shape future rates.
  • “We know this transition is difficult and some people will be hurt,” said Covered California board member Susan Kennedy. “But delaying the transition won’t solve a single problem.”
  • Covered California said 79,891 people have enrolled in private health plans through Tuesday. The state has outperformed the troubled federal exchange, which has struggled with an error-prone website and meager enrollment.

Modified from a latimes.com article

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Small Group Health Insurance “Cancellations”––The Next Shoe to Drop But a More Complicated One

Obamacare is impacting the small group insurance market in many of the same ways as the individual health insurance market.

While employers with less than 50 workers don’t have to provide coverage, if they do they are required to comply with the same essential benefit mandates, age rating changes, and pre-existing condition reforms the individual market faces.

THIS MEANS ESSENTIALLY ALL SMALL GROUP POLICIES CANNOT CONTINUE AS THEY ARE––THEY HAVE TO BE DISONTINUED.

  • The first small group renewals are now occurring––the January 1 renewals that typically have to be delivered during the month of November under state law.
  • Many employers are facing significant changes in order to comply with Obamacare and therefore price increases. The biggest rate increases are generally going to those employers with the youngest groups the most impacted by the new “age compression” rules.
  • Does this mean these small employers’ coverage has been outright cancelled and they will now send their workers to the exchanges?  No, at least not anytime soon. But that does not mean that lots of these small employers aren’t angry and confused.
  • Some small groups, but only a very few, benefit from the grandfather rules if their plan was in place in March 2010 and they haven’t made any but the slightest changes. Like the individual market that comes under the same grandfather rules, the Obama administration made those regulations so stringent almost no one is grandfathered.
  • Perhaps the most common means by which small groups are avoiding the big increases, at least for the first year, is through the early renewal strategy. Most states and health plans have allowed employers to change their renewal date to late in 2013 thereby allowing them to keep the old health plans for about another year. But this is a stay of execution, not a solution. Their old plans are toast when they next renew.
  • If the small employer doesn’t have access to the early renewal strategy, then they must face higher premium costs immediately. To offset these higher costs, at least in part, small employers are doing what they have always done––increasing deductibles and co-pays to try to keep the premiums close to what they were. This is also what the employers who used the early renewal strategy will have to consider come the end of 2014.

Will the small employer, faced with these increases, abandon their health plans and send their workers to the exchanges? Since so many have gotten that early renewal one-year stay of execution, we really won’t know that for a while.

The number of small employers offering health benefits was already on a years long steady and this certainly can’t help. But with all of that said, the simplistic, “Small employers are better off dropping coverage and sending them to the exchange,” is just too simplistic.

Let’s say an employer pays $7,000 a year toward the average worker’s health insurance benefit––typical in the small market. Let’s further say the employer could just give the worker that money in a pay raise and send them to the exchange.

First, the employer can’t just give them a payroll raise of $7,000. Increasing their wages has payroll tax and benefit cost implications––Social Security and Medicare taxes, workers compensation premiums, fringe benefit costs tied to payroll, vacation pay, and so on. That $7,000 would need to be reduced to about $6,000 to offset the employers payroll costs before it could go to the worker (and an employer with more than 50 workers would also be subject to the $2,000 fine for not providing health benefits and the “raise” would have to be further reduced).

Now the worker has $6,000 to take to the exchange. But wait, health insurance bought by an individual is not income tax preferenced––the worker has to pay state, federal, and payroll taxes of their own on this “raise.” Even if the worker is only in a 20% marginal bracket, this means the $6,000 just melted to about $5,000.

So the worker ends up with $5,000 to take to the exchange––about $400 a month. A higher income worker in a higher tax bracket might end up with only $4,000 net of taxes with which to buy insurance.

How does the worker fare with $5,000 to spend in the exchange? Remember the lower your income the higher the subsidies. If the worker has a very low income, they do very well––maybe even make a lot of money. If they are lower middle-income, they do OK. If they are middle to upper income they lose.

Who wins under this scheme? The lowest paid and least skilled workers. Who loses? The highest paid and most skilled, and presumably sought after workers. This strategy suddenly doesn’t look so smart if competing for skilled workers is what worries the employer.

It gets more problematic. The health insurance exchange subsidies are tied to family income, not what an employer pays their workers. An employee making $50,000 with a family could win under this scheme by being eligible for lots of subsidy. But if another $50,000 worker has a spouse also working and the household income is now $80,000 or $90,000 a year they would be disqualified for all or most of the federal health insurance subsidies.

So, this $50,000 worker does OK and that one has to pay most if not the full cost of health insurance out of their pocket.

It gets even more complicated. Employers often contribute more for family coverage and give single workers less because their coverage costs less. So, how do they pass out the raise when and if health benefits are terminated? Does a single worker get paid less for doing the same job going forward?

Just ditching the employer’s health insurance plan can be more attractive to businesses that are filled with low-income and unskilled workers. But any business that relies on even a few skilled and key employees will likely find this simplistic, The, “Just dump the insurance, give them a raise, and send them to the exchange,” idea has more holes than Swiss cheese.

They will use the early renewal strategy when they can to buy themselves a year. Then they will likely increase employee premiums and deductibles to keep the wolf from the door for maybe another year. But Obamacare caps out-of-pocket costs and employers will quickly bump up against that in a year or two.

*Modified from a Health Care Policy and Marketplace Review article

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Why Obama Can’t Just Uncancel All Those Insurance Plans

President Obama’s plan to reverse himself and let millions of people keep their health policies—the ones that insurance companies cancelled because don’t meet the Affordable Care Act’s standards—is something like an attempt to unscramble an omelet.

Among the problems:

  • State insurance commissioners are not enthusiastic. They’re the people who are actually in charge of approving the plans and rates that private insurers offer in each state. The regulators association threw tepid water on the plan in a statement Thursday, saying the decision “threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.” These officials can nix the idea at the state level, as Washington state’s regulator already has, according to the New York Times.
  • The feeling isn’t unanimous: California’s insurance commissioner, who already pushed some health plans to extend policies because they didn’t give customers the notice required by law, favors extending policies. But other state laws make doing so messy. In Florida, too, the commissioner supports the plan.
  • Insurers are also wary. The industry had a cool response to the reversal. Even if insurers want to extend the old policies, and their regulators agree, it’s not clear that there’s enough time. Will doctors and hospitals accept the resurrected plans? Rates and plans are normally filed for approval months ahead of time. “The complexity of trying to uncancel millions of canceled individual policies with only six weeks left in the year is staggering,” Citigroup  analyst Carl McDonald wrote, Bloomberg News reports.
  • Extending old plans changes the risk pool next year. The people in the individual market whose plans were cancelled have already passed medical underwriting—the insurance industry’s practice, banned from next year on, of denying coverage to people for being sick or having other preexisting conditions. That means they’re generally a healthier bunch than those entering the exchanges next year. The idea that some of these folks would have to pay more for more robust plans was baked into the law—their premiums will help subsidize coverage for sicker people whom insurers can no longer turn away. That’s why regulators, actuaries, and insurers are warning that the change could destabilize the market next year and drive up premiums for everyone else.
  • Even if it works, the fix is not a fix—it’s a delay. Obama didn’t say he’d let people keep their old, noncompliant health plans indefinitely. Year-long policies that start through Oct. 1, 2014, will be considered OK, and the administration is “assessing whether to extend it beyond the specified time frame,” according to the administration’s letter to insurance commissioners. But whenever the administration does start enforcing that piece of the law, people are going to get another round of cancellation letters from their insurance company. If they don’t have comparable choices on the exchanges, they’ll get angry all over again.

*Modified from a BusinessWeek.com article

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Dave Jones says California customers should be allowed to keep health plans

California Insurance Commissioner Dave Jones said he’s taken steps Thursday to allow more than 1 million residents with terminating insurance plans to keep them through next year. Jones said he’s asked Covered California to release insurers offering plans on the exchange from the requirement to cancel policies that don’t comply with the health care overhaul.

  • Jones has said repeatedly that he disagreed with the state exchange’s decision not to allow those plans to continue once the federal law took full effect.. Neither California nor federal law requires insurers to cancel non-compliant plans by Dec. 31. Jones noted that California insurers are not canceling small business customers — “and I think that also is unfair,” he said.
  • “I’ve asked Covered California to take this action immediately so that health insurers are free then from this contract provision and can follow the president’s request, and my request, that they allow their existing customers to renew their policies into 2014,” Jones, a staunch supporter of the federal health law, said in a conference call from San Francisco.
  • In California, an estimated 1.1 million people have received cancellation notices informing them that their plans were out of compliance with the federal health care overhaul. Jones had foreshadowed his decision by negotiating temporary reprieves for about 225,000 customers with two large insurers – Blue Shield of California and Anthem Blue Cross of California
  • “It’s very clear to everybody who has been following this issue the federal government told people in California and throughout the United States they can stay in their existing plans,” Jones said. “These are individuals and families who did exactly what we’ve been urging them for years to do, which is to purchase health insurance … So, clearly there was a commitment made to them and I think it’s important, collectively, that commitment be upheld.”
  • A Covered California spokesman, Roy Kennedy, said in a statement the exchange was assessing the impact and analyzing its options on how it will incorporate the modification into existing policy. He said the exchange is aware of the “urgent need for clarity around this segment of policy and is working closely with health plans, regulators, and policymakers to quickly determine how the president’s new guidance will be fulfilled for Californians.”
  • Other states operating their own insurance marketplaces, including Washington and Oregon, are rebuffing Obama’s invitation to extend the canceled policies. Obama has come under increasing pressure from congressional Democrats to delay the cancellations in light of the administration’s problematic launch of its online web portal for three dozen states.
  • “We will not be allowing insurance companies to extend their policies,” Washington Insurance Commissioner Mike Kreidler said in a prepared statement. “I believe this is in the best interest of the health insurance market in Washington.” Oregon Insurance Commissioner Laura Cali has said there were too many logistical difficulties to justify an extension.

*Modified for a sacbee.com article

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California insurance chief criticizes exchange for cancellations

California Insurance Commissioner Dave Jones says the state health exchange “made a bad decision” by requiring its participating insurers to cancel coverage by Dec. 31 for hundreds of thousands of consumers. “I don’t think it was necessary,” Jones said in an interview. “I think people should be given the opportunity to stay in their current plans for another year.”

  • Tuesday, Jones discussed a settlement with Blue Shield of California that will buy some more time for about 80,000 policyholders whose policies are being terminated. The San Francisco insurer agreed to let those policyholders extend their current coverage until March 31 to resolve regulators’ claims it didn’t give customers ample warning about the changes.
  • “This is important because it will allow people with current plans more time to shop and it resolves a defect we discovered,” Jones said. But Blue Shield said the changing deadlines may confuse customers and lead some people to pay a deductible twice in one year after they enroll in a new plan for 2014.
  • The issue of cancellations for about 900,000 individual policyholders in California and several million nationwide has sparked intense criticism of President Obama’s healthcare law. In recent weeks, insurance companies across the country have notified policyholders that their existing coverage will expire because it doesn’t meet all the standards of the Affordable Care Act.
  • In previous interviews, Peter Lee, executive director of Covered California, has defended the exchange’s requirement for health plans to end current policies by Dec. 31. He says consumers will benefit in the long run from having more people in the larger risk pool, which will influence future rates.
  • Lee and others had worried about insurers cherry-picking their healthier customers and renewing them for another year through most of 2014, as permitted under the healthcare law.
  • Jones said he isn’t sure those fears were warranted. “I’m not convinced it would have been fatal to the risk pool,” said Jones, a Democrat who has strongly backed the implementation of the healthcare law. “The Dec. 31 cutoff for individual policies in California didn’t have to happen.”

*Modified from a LA Times article

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Blue Shield forced by state to delay its Obamacare cancellations

California Insurance Commissioner Dave Jones will announce Tuesday an agreement with a “major health insurance company” in California to delay by three months cancellation of more than 115,000 individual policies due to Affordable Care Act rules. UPDATE: On Tuesday morning, Blue Shield of California clarified that the 80,000 policies in question cover 113,000 people.

  • Blue Shield officials said Monday evening that the Department of Insurance had required them to take this step, on threat of a lawsuit compelling the insurer to delay the cancellations. The department declined official comment ahead of the insurance commissioner’s press conference.
  • The deal has the look and feel of a political retreat by Democratic officeholders worried about the recent outcry about cancelled individual policies. Technically, insurance regulators reached a deal with Blue Shield of California Life & Health Insurance Co., a subsidiary under DOI’s regulatory umbrella. The deal only affects non-grandfathered policyholders, and includes what Blue Shield described as “significant risks to policyholders,” including potentially facing two deductible limits in a single year.
  • The extensions can’t last more than three months, and must end March 31, Blue Shield said. Consumers need to be aware that taking advantage of the delay could come with downsides, including the possibility of being liable for two sets of deductibles and possibly missing out on tax credits and cost-sharing subsidies available only through the Covered California exchange.

Blue Shield noted in a statement to the Business Times that the three-month extension is likely to be most appealing to “healthy individuals who use few health care services,” and as a result could damage Covered California’s efforts to recruit as many healthy policyholders as possible to counteract the expected interest by older, sicker Californians in signing on. Without an influx of young, healthy policyholders, “average medical costs for people in the Exchange will be higher, which could result in premium increases in 2015 for everyone,” Blue Shield’s statement said.

Blue Shield has about 119,000 individual policyholders whose policies are being cancelled at year-end, although many of them have the option of moving into other Blue Shield plans, some of which are considerably more expensive.

Jones’ late Monday media advisory said that 115,000 policyholders “may keep lower priced, wider network policies through first quarter of 2014,” potentially the first hole in the dike, given many consumers’ unhappiness about the cancellation of individual plans they thought President Barack Obama had promised not to take from them.

As many as 1 million individual and family plan enrollees in California may face cancellation of existing coverage at year-end due to Obamacare and contracts signed with Covered California, as the Business Times reported late last week.

*Modified from a Bizjournals.com article

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More healthcare sticker shock as 1 million Californians face policy cancellations

As a national debate rages over individual health policy cancellations because their coverage doesn’t meet the Affordable Care Act’s requirements, another shoe is likely to drop very soon in California. That’s because, so far, there’s been no word on how the changes will affect enrollees in individual and family plans at Anthem Blue Cross, which rivals say is by far the biggest player in the Golden State’s individual market, with about 760,000 enrollees.

[Note: Letters are currently being sent to Anthem Blue Cross members]

  • If Woodland Hills-based Anthem’s enrollment is affected at about the same rate as other insurers’ individual plans in California, about half of those members — or approximately 380,000 — may have received letters in recent weeks telling them their current plans are being cancelled, and advising them on alternate options. Anthem officials haven’t yet chimed in, and have not responded so far to multiple requests for comment and enrollment data by the San Francisco Business Times. 
  • But close to 1 million Californians are likely to be forced to switch health plans due to national health reform’s requirements. Peter Lee, executive director of the Covered California exchange, told an editorial board meeting at the San Francisco Chronicle this week that 900,000 individual policyholders would be in that position, according to an Oct. 29 blog post by Chronicle columnist Debra Saunders.
  • Patrick Johnston, president of the California Association of Health Plans, described the controversy as “the delayed effect of the law that was passed in 2010,” the ACA. “The attention is caused by the notices that people are receiving, but the (ACA) set up the transition,” Johnston told the Business Times. “The health plans implement the law, they didn’t create it.”
  • No one can be denied insurance because of pre-existing conditions under the Affordable Care Act, which is a popular provision, he said, but because of the changes some people “will pay more,” including people who chose less comprehensive, and consequently less expensive coverage that is no longer one of the options. “They were probably probably health and relatively young,” for the most part, and the ACA is now moving them, as planned, into a pool that includes many older and sicker individuals. That’s why in many cases their costs are going up steeply.
  • A number of national stories have mentioned that San Francisco-based Blue Shield of California is cancelling current individual coverage for 119,000 enrollees, and that Kaiser Permanente is taking a similar step with 160,000 members. The Business Times reported yesterday that 76,000 Health Net of California enrollees also received letters informing them of the need to switch to a so-called “compliant plan.”
  • Some enrollees in individual plans in California are allowed to stay put, having been “grandfathered in” because they signed up for coverage before passage of the Affordable Care Act, aka Obamacare, in March 2010. But the Golden State has about 2 million members of such plans, according to a Los Angeles Times story late last week, and roughly half of them may be forced to move into other coverage by Jan. 1 that meets the ACA’s strictures, including offering more comprehensive coverage than many bare-bones individual plans have provided.
  • Although much of policyholders’ ire has been directed at the health plans that sent the letters, executives at a major California health insurer point to language in contracts they and other plans signed with the Covered California exchange that require them to “terminate or arrange for the termination of all of its non-grandfathered individual health insurance plan contracts or policies which are not compliant with the applicable provisions of the Affordable Care Act.”

So far, Covered California hasn’t released updated information on completed applications since a week after the site went live Oct. 1, and haven’t provided any information about how many — if any — Californians have successfully enrolled. Twelve Golden State health plans signed contracts with Covered California in August to participate in the exchange, but a small subset of those plans — including Anthem, Blue Shield, Health Net and Kaiser Permanente — provide the bulk of individual coverage in the state.

Participating health plans spent much of the summer finalizing details of the Covered California contracts, many of which “had a material effect on the actual plans we would offer in 2014,” said a participant at one of the major players. Not until late August did one major player, for example, have health plan details and pricing nailed down. Then it had to compare those details against existing coverage provided to tens of thousands of individual plan members whose coverage wasn’t deemed to be ACA-compliant (many other policyholders were grandfathered in, according to federal guidelines).

The health plans with individual policyholders were legally required to advise policyholders of any “material changes” to their coverage at least 90 days in advance, the health plan executive said, which meant letters had to reach enrollees by Oct. 1.

*Modified from a bizjournals.com article

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Obama Officials In 2010: 93 Million Americans Will Be Unable To Keep Their Health Plans Under Obamacare

Obama administration knew that Obamacare would disrupt private plans. Disruption of the existing health insurance market—a disruption codified in law, and known to the administration—is only just beginning. It turns out that in an obscure report buried in a June 2010 edition of the Federal Register, administration officials predicted massive disruption of the private insurance market

  • “The Departments’ mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013,” wrote the administration on page 34,552 of the Register.
  • All in all, more than half of employer-sponsored plans will lose their “grandfather status” and get canceled. According to the Congressional Budget Office, 156 million Americans—more than half the population—was covered by employer-sponsored insurance in 2013.

On Tuesday, White House spokesman Jay Carney attempted to minimize the disruption issue, arguing that it only affected people who buy insurance on their own. “That’s the universe we’re talking about, 5 percent of the population,” said Carney. “In some of the coverage of this issue in the last several days, you would think that you were talking about 75 percent or 80 percent or 60 percent of the American population.”

By “coverage of this issue,” Carney was referring to two articles. The first, by Chad Terhune of the Los Angeles Times, described a number of Californians who are seeing their existing plans terminated and replaced with much more expensive ones. “I was all for Obamacare until I found out I was paying for it,” said one.

The second article, by Lisa Myers and Hanna Rappleye of NBC News, unearthed the aforementioned commentary in the Federal Register, and cited “four sources deeply involved in the Affordable Care Act” as saying that “50 to 75 percent” of people who buy coverage on their own are likely to receive cancellation notices due to Obamacare.

But Carney’s dismissal of the media’s concerns was wrong, on several fronts. Contrary to the reporting of NBC, the administration’s commentary in the Federal Register did not only refer to the individual market, but also the market for employer-sponsored health insurance.

  • Section 1251 of the Affordable Care Act contains what’s called a “grandfather” provision that, in theory, allows people to keep their existing plans if they like them. But subsequent regulations from the Obama administration interpreted that provision so narrowly as to prevent most plans from gaining this protection.
  • How many people are exposed to these problems? 60 percent of Americans have private-sector health insurance—precisely the number that Jay Carney dismissed. As to the number of people facing cancellations, 51 percent of the employer-based market plus 53.5 percent of the non-group market (the middle of the administration’s range) amounts to 93 million Americans.
  • Another 25 million people, according to the CBO, have “nongroup and other” forms of insurance; that is to say, they participate in the market for individually-purchased insurance. In this market, the administration projected that “40 to 67 percent” of individually-purchased plans would lose their Obamacare-sanctioned “grandfather status” and get canceled, solely due to the fact that there is a high turnover of participants and insurance arrangements in this market. (Plans purchased after March 23, 2010 do not benefit from the “grandfather” clause.) The real turnover rate would be higher, because plans can lose their grandfather status for a number of other reasons.

Will these canceled plans be replaced with better coverage?

  • President Obama’s famous promise that “you could keep your plan” was not some naïve error or accident. He, and his allies, knew that previous Democratic attempts at health reform had failed because Americans were happy with the coverage they had, and opposed efforts to change the existing system.
  • Now, supporters of the law are offering a different argument. “We didn’t really mean it when we said you could keep your plan,” they say, “but it doesn’t matter, because the coverage you’re going to get under Obamacare will be better than the coverage you had before.”

Senator Ron Johnson (R., Wisc.) and Rep. Fred Upton (R., Mich.) have proposed the “If You Like Your Health Care Plan You Can Keep It Act,” with dozens of co-sponsors. The two-page bill simply states that “nothing in [the Affordable Care Act] shall be construed to require that an individual terminate coverage under a group health plan or health insurance coverage in which such individual was enrolled during any part of the period beginning on the date of enactment of this Act and ending on December 31, 2013.”

*Modified from an article by Avik Roy on Forbes.com

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Report: Obama administration knew millions would be forced to change insurance

Before the Affordable Care Act became law in 2010, President Barack Obama promised Americans they could keep their health care plans if they liked them. But already hundreds of thousands of citizens are receiving notification that their plans are being canceled because they don’t comply with the new law, and, according to NBC News, the Obama administration has known for at least three years the cancellations were coming.

  • While campaigning for health care reform in 2009, Obama went out of his way to make one thing perfectly clear: If you like your current health care plan, you will be able to keep it. On June 15, 2009, Obama said this: “We will keep this promise to the American people. If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period.”
  • In 2012, he echoed that sentiment, saying, ““If [you] already have health insurance, you will keep your health insurance.”
  • However, many are finding that not to be the case. More than 300,000 cancellation notices have been sent out in Florida, according to Kaiser Health News, and another 180,000 in California. In New Jersey, the number of cancellations tops 800,000, the Star-Ledger reports.
  •  According to NBC News, approximately 50 to 75 percent of the 14 million Americans who buy their health insurance individually should expect to receive a cancellation letter over the next year “because their existing policies don’t meet the standards mandated by the new health care law.” This could result in millions of Americans being forced to purchase different policies, potentially at higher premiums.

So how did the Obama administration know the cancellations would be coming?

  • The Affordable Care Act states that people who had health insurance prior to March 23, 2010 — the day Obama signed the bill into law — will be able to keep those policies even if they don’t meet the requirements of the new law. However, the Department of Health and Human Services tightened that provision so 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,” NBC News reports.
  • Because the market for individual insurance experiences significant turnover, the insinuation is the Obama administration had to have known many policies “grandfathered” in would not qualify for the Affordable Care Act. NBC News reports that the administration knew in 2010 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.”
  • “This says that when they made the promise [that individuals could keep their plans], they knew half the people in this market outright couldn’t keep what they had and then they wrote the rules so that others couldn’t make it either,” Robert Laszewski of Health Policy and Strategy Associates told NBC News.

On Monday, former Obama adviser David Axelrod said on MSNBC’s “Morning Joe” that “most people are going to keep their own plan.” When asked about Axelrod’s admission of “most” as opposed to all, White House spokesman Jay Carney acknowledge that some individual’s plans will be canceled, but countered that the plans they switch to will be better and affordable.

“What 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,” Carney said. “… So it’s true that there are existing health care plans on the individual market that don’t meet those minimum standards and therefore do not qualify for the Affordable Care Act.”

Actually, what the president said back in 2009 was “[the Affordable Care Act] is for people who aren’t happy with their current plan. If you like what you’re getting, keep it. Nobody is forcing you to shift.”

Only now, some who like their plans are being forced, including Laszewski. According to NBC News, he has a so-called “Cadillac plan” — “the best health insurance policy you can buy,” he said — but recently received notice in the mail that it was being canceled.

*Modified from a Yahoo News article

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Some health insurance gets pricier as Obamacare rolls out

Thousands of Californians are discovering what Obamacare will cost them — and many don’t like what they see. Many middle-class Californians with individual health plans are surprised they need policies that cover more — and cost more. Nearly 2 million Californians have individual insurance, and several hundred thousand of them are losing their health plans in a matter of weeks.

These middle-class consumers are staring at hefty increases on their insurance bills as the overhaul remakes the healthcare market. Their rates are rising in large part to help offset the higher costs of covering sicker, poorer people who have been shut out of the system for years. 

  • The 16 million Californians who get health insurance through their employers aren’t affected. Neither are individuals who have “grandfathered” policies bought before March 2010, when the healthcare law was enacted. It’s estimated that about half of policyholders in the individual market have those older plans.
  • All these cancellations were prompted by a requirement from Covered California, the state’s new insurance exchange. The state didn’t want to give insurance companies the opportunity to hold on to the healthiest patients for up to a year, keeping them out of the larger risk pool that will influence future rates.
  • Although recent criticism of the healthcare law has focused on website glitches and early enrollment snags, experts say sharp price increases for individual policies have the greatest potential to erode public support for President Obama’s signature legislation. “This is when the actual sticker shock comes into play for people,” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “There are winners and losers under the Affordable Care Act.”
  • Fullerton resident Jennifer Harris thought she had a great deal, paying $98 a month for an individual plan through Health Net Inc. She got a rude surprise this month when the company said it would cancel her policy at the end of this year. Her current plan does not conform with the new federal rules, which require more generous levels of coverage. Now Harris, a self-employed lawyer, must shop for replacement insurance. The cheapest plan she has found will cost her $238 a month. She and her husband don’t qualify for federal premium subsidies because they earn too much money, about $80,000 a year combined.
  • Middle-income consumers face an estimated 30% rate increase, on average, in California due to several factors tied to the healthcare law. Some may elect to go without coverage if they feel prices are too high. Penalties for opting out are very small initially. Defections could cause rates to skyrocket if a diverse mix of people don’t sign up for health insurance.

Pam Kehaly, president of Anthem Blue Cross in California, said she received a recent letter from a young woman complaining about a 50% rate hike related to the healthcare law. “She said, ‘I was all for Obamacare until I found out I was paying for it,'” Kehaly said.

Blue Shield of California sent termination letters to 119,000 customers last month whose plans don’t meet the new federal requirements. About two-thirds of those people will experience a rate increase from switching to a new health plan, according to the company.

HMO giant Kaiser Permanente is canceling coverage for about half of its individual customers, or 160,000 people, and offering to automatically enroll them in the most comparable health plan available.

Peter Lee, executive director of Covered California, said the state and insurers agreed that clearing the decks by Jan. 1 was best for consumers in the long run despite the initial disruption. Lee has heard the complaints — even from his sister-in-law, who recently groused about her 50% rate increase.

“People could have kept their cheaper, bad coverage, and those people wouldn’t have been part of the common risk pool,” Lee said. “We are better off all being in this together. We are transforming the individual market and making it better.”

Lee said consumers need to consider all their options. They don’t have to stick with their current company, and higher premiums are only part of the cost equation. Lee said some of these rate hikes will be partially offset by smaller deductibles and lower limits on out-of-pocket medical expenses in the new plans.

Still, many are frustrated at being forced to give up the plans they have now. They frequently cite assurances given by Obama that Americans could hold on to their health insurance despite the massive overhaul.

“All we’ve been hearing the last three years is if you like your policy you can keep it,” said Deborah Cavallaro, a real estate agent in Westchester. “I’m infuriated because I was lied to.”

Supporters of the healthcare law say Obama was referring to people who are insured through their employers or through government programs such as Medicare. Still, they acknowledge the confusion and anger from individual policyholders who are being forced to change.

Cavallaro received her cancellation notice from Anthem Blue Cross this month. The company said a comparable Bronze plan would cost her 65% more, or $484 a month. She doubts she’ll qualify for much in premium subsidies, if any. Regardless, she resents losing the ability to pick and choose the benefits she wants to pay for. “I just won’t have health insurance because I can’t pay this increase,” she said.

A number of factors are driving up rates. In a report this year, consultants hired by the state said the influx of sicker patients as a result of guaranteed coverage was the biggest single reason for higher premiums. Bob Cosway, a principal and consulting actuary at Milliman Inc. in San Diego, estimated that the average individual premium in 2014 will rise 27% because of that difference alone.

Individual policies must also cover a higher percentage of overall medical costs and include 10 “essential health benefits,” such as prescription drugs and mental health services. The aim is to fill gaps in coverage and provide consumers more peace of mind. But those expanded benefits have to be paid for with higher premiums.

The federal law also adjusts how rates are set by age, a change that gives older consumers a break and shifts more costs to younger people. Rates by age can vary by only 3 to 1 starting next year as opposed to 6 to 1 in some cases now in California. People in their 20s just starting their careers may earn so little they qualify for subsidies. But that might not be the case for consumers who are slightly older and earning more.

“It has the effect of benefiting people in their 50s and 60s and shifting costs to people in their 20s and 30s,” said Patrick Johnston, president of the California Assn. of Health Plans. “Benefits are being increased for all, but it’s not government subsidies for all. Some will pay more.”

Rates would be going up regardless of changes from the healthcare expansion. The average individual premium will climb 9% next year because of rising healthcare costs and increases in medical provider reimbursement, according to Milliman’s estimates.

Some consumer groups have questioned whether insurers are inflating their rates under the guise of the healthcare law changes.

“We believe the prices are higher than they should be,” said Jamie Court, president of Consumer Watchdog, a Santa Monica advocacy group. “This is giving a bad name to the Affordable Care Act.”

State regulators checked the insurance companies’ math and underlying cost projections for next year, but they don’t have the authority to deny increases. Under federal rules, insurers can be ordered to issue rebates if they don’t spend a minimum amount of every premium dollar on customers’ medical care.

“The rates aren’t going up because insurance companies are pocketing more money,” Lee said. “That is what it takes to pay the claims and deliver the healthcare.”

*Modified from a LA Times.com article

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