By Lisa Myers and Hannah Rappleye
President
Obama repeatedly assured Americans that after the Affordable Care Act
became law, people who liked their health insurance would be able to
keep it. But millions of Americans are getting or are about to get
cancellation letters for their health insurance under Obamacare, say
experts, and the Obama administration has known that for at least three
years.
Four
sources deeply involved in the Affordable Care Act tell NBC NEWS that
50 to 75 percent of the 14 million consumers who buy their insurance
individually can expect to receive a “cancellation” letter or the
equivalent over the next year because their existing policies don’t meet
the standards mandated by the new health care law. One expert predicts
that number could reach as high as 80 percent. And all say that many of
those forced to buy pricier new policies will experience “sticker
shock.'
None of this should come as a shock to the Obama administration. The
law states that policies in effect as of March 23, 2010 will be
“grandfathered,” meaning consumers can keep those policies even though
they don’t meet requirements of the new health care law. But the
Department of Health and Human Services then wrote regulations that
narrowed that provision, by 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.
Buried
in Obamacare regulations from July 2010 is an estimate that because of
normal turnover in the individual insurance market, “40 to 67 percent”
of customers will not be able to keep their policy. And because many
policies will have been changed since the key date, “the percentage of
individual market policies losing grandfather status in a given year
exceeds the 40 to 67 percent range.”
That means the
administration knew that more than 40 to 67 percent of those in the
individual market would not be able to keep their plans, even if they
liked them.
“This says that when they made the promise, they knew half the people
in this market outright couldn’t keep what they had and then they wrote
the rules so that others couldn’t make it either,” said Robert
Laszewski, of Health Policy and Strategy Associates, a consultant who
works for health industry firms. Laszewski estimates that 80 percent of
those in the individual market will not be able to keep their current
policies and will have to buy insurance that meets requirements of the
new law, which generally requires a richer package of benefits than most
policies today.
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. “One of the main
goals of the law is to ensure that people have insurance they can rely
on – that doesn’t discriminate or charge more based on pre-existing
conditions. The consumers who are getting notices are in plans that do
not provide all these protections – but in the vast majority of cases,
those same insurers will automatically shift their enrollees to a plan
that provides new consumer protections and, for nearly half of
individual market enrollees, discounts through premium tax credits,”
said White House spokesperson Jessica Santillo.
Individual
insurance plans with low premiums often lack basic benefits, such as
prescription drug coverage, or carry high deductibles and out-of-pocket
costs. The Affordable Care Act requires all companies to offer more
benefits, such as mental health care, and also bars companies from
denying coverage for preexisting conditions.
Today, White House
spokesman Jay Carney was asked about the president’s promise that
consumers would be able to keep their health care. “What the president
said and what everybody said all along is that there are going to be
changes brought about by the Affordable Care Act to create minimum
standards of coverage, minimum services that every insurance plan has to
provide,” Carney said. “So it's true that there are existing healthcare
plans on the individual market that don't meet those minimum standards
and therefore do not qualify for the Affordable Care Act.”
Heather Goldwater, 38, of South Carolina, says that she received a letter from her insurer saying the company would no longer offer her plan, but hasn't yet received a follow-up letter with a comparable option.
Other experts said that most consumers in the individual market will
not be able to keep their policies. Nancy Thompson, senior vice
president of CBIZ Benefits, which helps companies manage their employee
benefits, says numbers in this market are hard to pin down, but that
data from states and carriers suggests “anywhere from 50 to 75 percent”
of individual policy holders will get cancellation letters. Kansas
Insurance Commissioner Sandy Praeger, who chairs the health committee of
the National Association of Insurance Commissioners, says that estimate
is “probably about right.” She added that a few states are asking
insurance companies to cancel and replace policies, rather than just
amend them, to avoid confusion.
A spokesman for America’s Health
Insurance Plans (AHIP), an insurance trade association, also said the 50
to 75 percent estimate was consistent with the range they are hearing.
Those getting the cancellation letters are often shocked and unhappy.
George Schwab, 62, of North Carolina, said he was "perfectly happy"
with his plan from Blue Cross Blue Shield, which also insured his wife
for a $228 monthly premium. But this past September, he was surprised to
receive a letter saying his policy was no longer available. The
"comparable" plan the insurance company offered him carried a $1,208
monthly premium and a $5,500 deductible.
And the best option he’s found on the exchange so far offered a 415 percent jump in premium, to $948 a month.
"The deductible is less," he said, "But the plan doesn't meet my needs. Its unaffordable."
"I'm
sitting here looking at this, thinking we ought to just pay the fine
and just get insurance when we're sick," Schwab added. "Everybody's
worried about whether the website works or not, but that's fixable.
That's just the tip of the iceberg. This stuff isn't fixable."
Heather Goldwater, 38, of South Carolina, is raising a new baby while
running her own PR firm. She said she received a letter last July from
Cigna, her insurance company, that said the company would no longer
offer her individual plan, and promised to send a letter by October
offering a comparable option. So far, she hasn't received anything.
"I'm completely overwhelmed with a six-month-old and a business,” said
Goldwater. “The last thing I can do is spend hours poring over a website
that isn't working, trying to wrap my head around this entire health
care overhaul."
Goldwater said she supports the new law and is
grateful for provisions helping folks like her with pre-existing
conditions, but she worries she won’t be able to afford the new
insurance, which is expected to cost more because it has more benefits.
"I'm jealous of people who have really good health insurance," she said.
"It's people like me who are stuck in the middle who are going to get
screwed."
Richard Helgren, a Lansing, Mich., retiree, said he
was “irate” when he received a letter informing him that his wife Amy's
$559 a month health plan was being changed because of the law. The plan
the insurer offered raised his deductible from $0 to $2,500, and the
company gave him 17 days to decide.
The higher costs spooked him
and his wife, who have painstakingly planned for their retirement years.
"Every dollar we didn't plan for erodes our standard of living,"
Helgren said.
Ulltimately, though Helgren opted not to shop through the ACA
exchanges, he was able to apply for a good plan with a slightly lower
premium through an insurance agent.
He said he never believed President Obama’s promise that people would be able to keep their current plans.
"I
heard him only about a thousand times," he said. "I didn't believe him
when he said it though because there was just no way that was going to
happen. They wrote the regulations so strictly that none of the old
polices can grandfather."
For months, Laszewski has warned that
some consumers will face sticker shock. He recently got his own notice
that he and his wife cannot keep their current policy, which he
described as one of the best, so-called "Cadillac" plans offered for
2013. Now, he said, the best comparable plan he found for 2014 has a
smaller doctor network, larger out-of-pocket costs, and a 66 percent
premium increase.
“Mr. President, I like the coverage I have," Laszweski said. "It is the best health insurance policy you can buy."
