Two basic realities about Obamacare have been in obvious conflict since the law passed in early 2010. Now the trains are heading for a collision with insurers standing on the tracks between them, trying to restore order.
No, it is not true that the insurers are “canceling” coverage for millions of people, as media outlets reported late Tuesday and today. But many people will have to pay more for better coverage, as has been widely reported all along.
We don’t yet know how many Connecticut people are affected by the change and it will be hard to ever know, since companies have totally revamped their coverage — so, in effect old plans on the individual market are going away.
The first Obamacare fact was that the president has often said the reform will not force people to lose their coverage or have to change doctors, if they like the insurance they have now. This is true for the vast majority of people, especially those on group plans through work.
The second fact, built into Obamacare, is that health plans starting Jan. 1, 2014 must offer a suite of coverage such as hospitalization, prescription drugs and maternity care. Many plans, especially in the individual market, which covers 15 million people nationwide, did not offer such coverage. So the prospect loomed that millions of people would have to pay far higher rates, or lose their insurance.
To ease matters, the Affordable Care Act allowed insurers to “grandfatfher” plans that were not Obamacare compliant. If you had a plan as of March, 2010, when the law was passed, and you never changed that plan, you could keep it indefinitely — even if it fell short of Obamacare thresholds.
Many people, however, have plans that can’t be grandfathered and are not compliant. If they’re eligible for subsidies on the Obamacare health exchanges, they may find better plans for the same or even less money.
But the trouble is this: Many people are in plans that are ending, and will have to pay more for new plans. This is leading media outlets to report “cancelations” totaling as many as 2 million, The Washington Post reported – in apparent conflict with Obama’s promises.
The Post’s Fact Checker blog even gave Obama the dreaded four Pinocchios for what it said was his deceitful promise.
Now insurers are caught in between as Obamacare opponents howl, with the hot-button word “cancel” bandying about.
“We’re not canceling anybody or dropping anybody,” said Aetna spokeswoman Cynthia Michener. “Under the law we have to provide a minimum level of benefits, and so we did retool our plans to make them compliant.”
Semantics? I don’t think so. A cancellation is a notice from an insurer that you need to go away, we aren’t covering you anymore. This is more of an adjustment, albeit a big, nasty one for some people. And even for exactly comparable coverage, many people will pay more in the individual market because of medical inflation, guaranteed coverage and federal taxes and fees.
“Health plans want to keep their customers,” the industry group, America’s Health Insurance Plans, said in a written statement.
The rules apply to plans that take effect as of Jan. 1, so if you have an Aetna plan that expires anytime up to Dec. 31, you can renew it for another year, Michener said. The new prices and coverage wouldn’t start until late 2014 for those people renewing now.
Aetna can’t say how many people have “non-compliant” plans because the Hartford-based company retooled all of its individual plans.
In a letter to individual policyholders whose plans were not grandfathered — the vast majority — Aetna said, “some people will pay more for their health coverage, and others less.” All but a few, of course, will pay more for equivalent or better coverage.
Many health insurance customers are upset over the changes. My colleague Matthew Sturdevant reported that 1,400 of Fairfield insurance broker Alan Sheketoff’s 2,300 customers in the Connecticut individual market received letters saying their health plan was being discontinued because it didn’t meet the Obamacare thresholds.
“We’re calling it the ‘screw you’ letter,” Sheketoff told Sturdevant.
Cigna is letting people renew old plans even before they expire. So, for 99 percent of Cigna’s individual customers who have a plan that’s not Obamacare compliant, they can roll it over now, and have it stay in force for another year.
“We’ve been communicating this to our members through the summer, through the fall,” Cigna spokesman Jon Sandberg said.
Cigna and Aetna are both small players in the individual market. In Connecticut, Aetna has 32,000 individuals covered and Cigna offers only a tiny number. Aetna CEO Mark T. Bertolini said Tuesday that the market represents only about 3 percent of revenues for the company, which has plans covering 44 million people.
The number of Cigna customers who can’t renew a plan this year is 1,500 nationwide, Sandberg said.
Just as Republicans handed Obama a free pass on Oct. 1 by forcing a government shutdown when the health exchanges went online unprepared, Obama handed Republicans a freebie with his coverage promise that was false under the law. He should have been less sweeping.
But neither the balky national exchange system nor the fact that Obama was wrong about everybody keeping their same coverage proves the health care reform act is bad policy. They just prove that change is painful.