Published May 30, 2013
WASHINGTON – New health insurance rules under ObamaCare could lead to a host of personal insurance plans being canceled as early as this fall, a scenario expected to cause consumer confusion.
Under the federal overhaul, those policies that cannot meet new insurance plan standards may be discontinued. This means individuals, and some small businesses, that rely on those plans will have to find new ones.
The goal is to ensure that most insurance policies offer a basic set of coverage, as part of the Obama administration's plan to cover most of the nation's 50 million uninsured.
Yet it also seems to run afoul of one of the president's best-known promises on the law: "If you like your health care plan, you'll be able to keep your health care plan."
In fact, state insurance commissioners largely are giving insurers the option of canceling existing plans or changing them to comply with new federal requirements. Large employer plans that cover most workers and their families are unlikely to be affected.
The National Association of Insurance Commissioners says it is hearing that many carriers will cancel policies and issue new ones because administratively that is easier than changing existing plans.
About 14 million Americans currently purchase their health policies individually, a number expected to more than double eventually because of the new law's subsidies and one-stop insurance markets. But the transition may not be seamless.
"The impending changes ... have the potential to cause policyholder confusion," said a recent memo from Iowa Insurance Commissioner Nick Gerhart to insurers. Though a Republican-led state, Iowa is helping to carry out major portions of the health care law.
Nationally a considerable number of people could be affected by cancellations. Information from insurers is still dribbling in to state regulators.
Seen as consumer safeguards by the administration, the new requirements limit costs paid by policyholders, and also expand benefits. That includes better preventive care, and also improved prescription coverage in many cases. The most important feature may be protection for your pocketbook if you get really sick: The new plans limit copayments and other out-of-pocket costs to $6,400 a year for individuals.
In Washington state, the changes will affect more than 400,000 people, said Stephanie Marquis, spokeswoman for insurance commissioner Mike Kreidler. Marquis said she expects the premiums for replacement plans to be similar to current ones, but with better coverage.
"Your costs involve more than your premiums," Marquis explained. "It's also what you would have to pay out of pocket if you had actually used your health plan."
Others see an encroaching nanny state.
"You're going to be forcibly upgraded," said Bob Laszewski, a health care industry consultant. "It's like showing up at the airline counter and being told, 'You have no choice, $300 please. You're getting a first-class ticket, why are you complaining?'"
Rollout of the Affordable Care Act is going full speed ahead, despite repeal efforts by congressional Republicans. New insurance markets called exchanges are to open in every state this fall. Middle-class consumers who don't get coverage on the job will be able to pick private health plans, while low-income people will be steered to an expanded version of Medicaid in states that accept it.
Other bumps on the road to the new health care law include potentially unaffordable premiums for smokers unless states act to waive them, a new $63-per-head fee that will hit companies already providing coverage to employees and dependents, and a long-term care insurance program that had to be canceled because of the risk it could go belly up.
The Obama administration did not respond directly to questions about the potential fallout from cancellation notices. Instead, Health and Human Services spokeswoman Joanne Peters released a prepared statement saying: "Beginning in October, individuals and small businesses will be able to shop for insurance in the marketplace, where we are already seeing that increased competition and transparency are leading to a range of options for quality, affordable plans."
Democrats in Congress devised a complicated scheme called "grandfathering" to try to deliver on Obama's pledge. It can shield plans from many of the law's requirements, provided the plans themselves change little.
State officials said it has proven impractical in most cases for insurers to "grandfather" plans sold to individuals.
The Associated Press contributed to this report.