Thousands can't keep health insurance policies

Companies are sending cancellation notices, concerning some consumers.

KAISER HEALTH NEWSOctober 26, 2013 

WASHINGTON - Insurers say the cancellations are necessary because the policies fall short of what the Affordable Care Act requires starting Jan. 1. Most are ending policies sold after the law passed in March 2010. At least a few are canceling plans sold to people with pre-existing medical conditions.

By all accounts, new policies to replace the canceled ones offer consumers better coverage, in some cases for comparable cost - especially after the inclusion of federal subsidies for those who qualify.

They cover 10 "essential" benefits the law now requires, including prescription drugs, mental health treatment and maternity care.

But the cancellation notices, which began arriving in August, have shocked many consumers in light of President Barack Obama's promise that people could keep their plans if they liked them.

"I don't feel like I need to change, but I have to," said Jeff Learned, a television editor in Los Angeles who must find a new plan for his teenage daughter, who has a health condition that has required multiple surgeries.

An estimated 14 million people purchase their own health coverage, so the impact of the cancellations has been felt across the country.

Florida Blue, for example, is terminating about 300,000 policies, about 80 percent of its individual business in the state.

Kaiser Permanente in California has sent notices to 160,000 people - about half of its individual business in the state.

Independence Blue Cross, the major insurer in Philadelphia, is canceling about 45 percent.

Consumer advocates say such cancellations raise concerns that companies might be targeting their most costly enrollees.

They could be "doing this as an opportunity to push their populations into the exchange and purge their systems" of policyholders they no longer want, said Jerry Flanagan, an attorney with the advocacy group Consumer Watchdog in California.

Some receiving cancellations say it looks like their costs will go up, despite studies projecting that about half of all enrollees will get income-based subsidies.

Kris Malean, 56, lives outside Seattle and has a health insurance policy that costs $390 a month with a $2,500 deductible and a $10,000 annual limit on her share of costs for doctor visits, drug costs or hospital care.

As a replacement, Regence BlueShield is offering her a plan for $79 a month more with a $5,000 deductible but that limits her potential out-of-pocket costs to $6,250 a year, including the deductible.

"My impression was … there would be a lot more choice, driving some of the rates down," said Malean, who does not believe she is eligible for a subsidy.

"The arithmetic is inescapable," said Patrick Johnston, CEO of the California Association of Health Plans.

Costs must be spread, he said, so while some consumers will see their premiums drop, others will pay more - "no matter what people in Washington say."

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