Why some individuals are losing their health plans under ObamaCare
After President Obama signed the Affordable Care Act in 2010, he assured Americans that if they like their health care plan, they'd get to keep it when the law takes full effect in 2014. He made similar statements in the 2012 presidential campaign. And in most cases, it's true. For a few million Americans, though, it won't be.
Hundreds of thousands of people who buy their own insurance are already getting cancellation notices from their health insurers, informing them that due to the more comprehensive coverage mandated under ObamaCare, their old plans are defunct. Eventually, at least half of the 14 million individually insured Americans will get such notices, according to experts. Plenty of them will face "sticker shock," with their suggested replacement plans carrying significantly higher premiums.
"Those getting the cancellation letters are often shocked and unhappy," say Lisa Myers and Hannah Rappleye at NBC News. And despite Obama's earlier statements, "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."
The Affordable Care Act does include a "grandfather" clause that allows you to keep any plan you've held since before March 23, 2010 — the day Obama signed the law. "But the Department of Health and Human Services then wrote regulations that narrowed that provision," add Myers and Rappleye, "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."
Since people frequently change health insurance plans and insurers routinely change their policies, there were always going to be some percentage of individuals who had to switch plans when the ObamaCare health care exchanges kicked in. Nobody knows exactly how many will fall into that category.
It's certainly true that ObamaCare will have some losers, says Jonathan Cohn at The New Republic, though experts "say that, most likely, the majority of people will end up paying less" for better coverage, thanks to tax credits. But, Cohn argues, "even if those paying more are a relatively tiny percentage of the population overall, they will still be a large group in raw numbers. It’s a big country!" That's a problem for Obama and the supporters of the law, especially because the ongoing issues with Healthcare.gov, the law's online marketplace, are making the ranks of the affected seem even larger.
[R]ight now the only way to get those all-important tax credits is through the Healthcare.gov website.... The people who stand to benefit from this transition don't know it yet, because they aren't able to log on and see how much they'll save. That's a big reason the stories of rate hikes are getting so much attention — and one more reason the federal government needs to fix its website soon. [New Republic]
Another big problem, argues Ross Douthat at The New York Times, is that while ObamaCare's subsidies help individuals who earn up to about $46,000, or families of four earning up to $96,000, that "cut-off creates a chasm between winners and losers right in the middle of the middle class." Forcing a "small fraction of middle class America" to pay more "is not history's great injustice," he adds. "But neither does it seem like the soundest or most politically stable public policy arrangement."
If we want health inflation to stay low and health care costs to be less of an anchor on advancement, we should want more Americans making $50,000 or $60,000 or $70,000 to spend less upfront on health insurance, rather than using regulatory pressure to induce them to spend more. And seen in that light, the potential problem with ObamaCare's regulation-driven "rate shock" isn't that it doesn't let everyone keep their pre-existing plans. It's that it cancels plans, and raises rates, for people who were doing their part to keep all of our costs low. [New York Times]
Hold on, says Josh Barro at Business Insider. "The new system of subsidies and cross subsidies that ObamaCare sets up is far from perfect," he says, but the system it is replacing, giving tax breaks to people with super-expensive plans, is "insane." The relevant question about ObamaCare is this: "Is it better than the old system, where huge subsidies go to people with no need for them and tens of millions are left uninsured?" If you're honest about it, the answer is yes, Barro says.
For the last few weeks, I have seen a vast outpouring of conservative sympathy for young, healthy, prosperous people whose health plan premiums are going up.... But what about the tens of millions of Americans who currently lack health insurance and are about to get access to available, affordable coverage? Where is the conservative sympathy for people who would be worse off if the law doesn't go forward? Nowhere. Because for all the needless complexity of liberals' approach to improving health insurance and helping the sick, conservatives don't have one at all. [Business Insider]