Are insurers trying to game ObamaCare?
This week, ObamaCare came under fire once again, this time amid a slew of reports that individuals in the private insurance market are being kicked off their old plans, despite President Obama's repeated promises that people who like their plans could keep them.
While the administration has only obliquely addressed what fact-checkers are calling a pants-on-fire lie, Obama this week put up a vigorous defense of the embattled law, telling a receptive crowd in Boston that the discarded plans are "cut-rate plans that don't offer real financial protection in the event of a serious illness or an accident."
"Before the Affordable Care Act," he added, "these bad apple insurers had free rein every single year to limit the care that you received or used minor pre-existing conditions to jack up your premiums or bill you into bankruptcy."
It's true that ObamaCare mandates insurance plans that are far more comprehensive. They are also, quite often, more expensive, angering consumers who will have no choice but to pony up more every month for insurance.
But are they really as expensive as they appear to be?
Plenty of the people receiving cancellation letters "will be pleasantly surprised to find that the most similar new plan offered by their current provider is actually cheaper than their old one," says Brian Beutler at Salon.
Others will be told that a similar plan will cost more. What they won't be told, because insurers don't want to downsell or advertise for their competitors, is that they're likely to find a different plan available through their state exchange that's closer to the same price or cheaper. If they can't find a cheaper one, then there's a decent chance that federal subsidies will reduce their out-of-pocket costs. [Salon]
The buggy Healthcare.gov site is making it harder for people to find that cheaper insurance, but insurance companies may be playing their part as well.
Let's take a real-life example: Real estate agent Deborah Cavallaro, from suburban Los Angeles, who "has been featured prominently on a round of news shows lately," says Michael Hiltzik at the Los Angeles Times. The interviews inevitably feature her "talking about how badly ObamaCare is going to cost her when her existing plan gets canceled and she has to find a replacement."
Her current plan, from Anthem Blue Cross, is a catastrophic coverage plan for which she pays $293 a month as an individual policyholder. It... fits the very definition of a nonconforming plan under ObamaCare. The deductible and out-of-pocket maximums are too high, the provisions for doctor visits too skimpy. As for a replacement plan, she says she was quoted $478 a month by her insurance broker, but that's a lot more than she'll really be paying. Cavallaro told me she hasn't checked the website of Covered California, the state's health plan exchange, herself. I did so while we talked.
The sad truth is that Cavallaro has been very poorly served by the health insurance industry and the news media. It seems that Anthem didn't adequately explain her options for 2014 when it disclosed that her current plan is being canceled. If her insurance brokers told her what she says they did, they failed her. [Los Angeles Times]
Yes, "there's something fishy going on here" from the insurance companies, says Paul Waldman at The American Prospect. "With hundreds of thousands of these letters going out and frightening people into thinking they have no choice but to sign up for a much more expensive plan, it's definitely something someone should look into."
Not everyone is convinced that insurers belong in the list of culprits. Peter Suderman at Reason says the "blame-shifting" from the Obama administration to the insurance industry is "a combination of misdirection and bullshit":
The important notion here is that if anything happens that people don't like, it's not the administration's fault. But the administration clearly played the key role in the insurance market changes that led to plans being canceled. No, the health law doesn't force insurers to cancel plans in progress, but it does institute a slew of new requirements that were certain to result in health insurers dropping current plans for millions of people as the yearly contracts for those plans come up for renewal. [Reason]
Of course, insurers are private companies that are trying to make a profit — a point ObamaCare's leftist critics make all the time. The bottom line is that it's up to consumers to carefully shop around — a job that will be easier once the insurance exchange websites are more functional, says Julie Appleby at Kaiser Health News.
Some insurers are recommending new plans that are most similar to the one being discontinued, and could automatically enroll you in such a plan if you take no action. Those are not your only options. You should double-check and compare a range of plans, experts say. An independent broker can show you plans from various carriers. You can also check your state's online marketplace or log onto or call Healthcare.gov.... While consumers are having trouble creating accounts through Healthcare.gov, the website now allows shoppers to browse health plans without creating an account. [Kaiser Health News]
ObamaCare does narrow your health insurance options, but also the ways that health insurers can screw you over. In other words, caveat emptor — buyer beware. As it always was.
This article was updated on Nov. 1, 2013 to clarify the allegations against health insurers.