San Francisco writer Lisa Buchanan said she and her husband got notices that they’ll have to pay almost twice as much for health insurance because their current coverage doesn’t comply with Obamacare.
In Mill Valley, California, retiree Diane Shore got a letter saying her plan is being eliminated and she’ll be moved to a new one with higher premiums.
“Here we are now being told that individual contributors will have a major change in their care and have to pay a higher premium,” Shore said in an interview. “The government either was totally misleading, or someone was not clear on exactly how this plan would affect individuals who are currently insured.”
Shore and Buchanan are among as many as 700,000 Californians being notified by insurance carriers that their plans don’t conform to the Patient Protection and Affordable Care Act of 2010, President Barack Obama’s signature health-care overhaul. The letters are a surprise to many in California, home to 12 percent of the U.S. population and the biggest state to embrace the law with its own insurance exchange.
Individually insured consumers from coast to coast will be affected, according to state insurance departments. As many as 250,000 Pennsylvanians are seeing their health coverage plans discontinued due to the law’s requirements, said Rosanne Placey, a spokeswoman for the state agency. In Indiana, about 108,000 may be affected, Chief Deputy Commissioner Logan Harrison said.
Nationwide, as many as 80 percent of people without a company-hosted plan or insurance through the Medicare or Medicaid government programs may have to find new health coverage, said Robert Laszewski, an insurance-industry consultant in Arlington, Virginia.
The law sets a floor of “essential benefits,” such as maternity and dental care, caps out-of-pocket costs and bans insurers from denying coverage based on medical conditions, all features that can push up the cost of policies.
The cancellation notices are aimed at people who buy their own insurance coverage, such as independent contractors and small-business owners, rather than those who are insured through their employers.
“The insurance companies have to notify their members that their policies are not going to be compliant with the Affordable Care Act,” said Gerald Kominski, director of the Center for Health Policy Research at the University of California at Los Angeles. “It’s obviously causing concern among people who are receiving the letters.”
In California, about a third of the estimated 600,000 to 700,000 affected will get taxpayer subsidies or qualify for Medi-Cal, the state’s health coverage for the poor, Peter V. Lee, executive director of Covered California, the state’s exchange, said in an Oct. 28 interview.
“The deck is stacked right now against anybody who has the misfortune to be ill and we’re leveling the playing field,” UCLA’s Kominski said. “The benefit for some people will come later when they get an illness and they keep their insurance instead of being threatened with losing it or threatened with their premiums going up by five- or six-fold.”
California alone has an estimated 1.86 million people who are individually insured, according to James Scullary, a Covered California spokesman. Nationally, there are about 14 million such people, Kominski said.
Not all of them will get cancellation notices. Plans purchased before March 23, 2010, when the law was enacted, can stay in effect under a “grandfather” clause if they haven’t changed significantly.
Consumers receiving cancellation notices have been caught unaware because of assurances from Obama that they wouldn’t lose their plans under the law, said Bill Hammett, president of Hammett Health Inc., a La Mesa, California-based insurance broker.
“They took the president at his word,” Hammett said in a telephone interview. “This is very much out of left field.”
Obama’s public statements on the point were clear:
“If you like your health-care plan, you can keep your health-care plan,” he said in an August 2009 teleconference with the Washington-based National Council of Churches. “Nothing that we’re doing obligates you to choose any plan other than the one that you have.”
“If you like your doctor, you can keep seeing your doctor,” Obama said. “We’re not going to interfere with that.”
The president, his staff and Democratic activists “knew that wasn’t true,” U.S. Representative Dana Rohrabacher, a California Republican, said by telephone. “They just pushed this over on the American people, trying to make them believe they’re going to get something for nothing.”
The health-care law eliminates “substandard policies that don’t provide minimum services,” said Jay Carney, a White House spokesman. The “80-plus percent” of Americans with employer plans or covered by government programs are unaffected.
Shore, of Mill Valley, pays $685 a month for coverage from Blue Shield of California, which sent her a letter saying her plan would be eliminated and she’ll be transferred to a comparable plan costing $45 more. The letter didn’t offer details on the new plan, she said.
Buchanan, 53, the San Francisco writer also insured by Blue Shield of California, and her 62-year-old husband, who is covered by Oakland-based Kaiser Permanente, pay a combined $681 in monthly premiums. Their insurers offered comparable plans that would increase their payments to about $1,130 a month.
Beyond the financial blow, Buchanan said she was concerned she could no longer see her present doctors.
“It’s more than likely that we’ll change plans because of the premiums,” Buchanan said in a telephone interview. “I’m probably going to lose those relationships because I’m not going to want to pay the premiums to keep them.”
Many plans that don’t comply with the law fail to cover hospitalization and have other gaps in coverage, said Sean Barry, a Blue Shield of California spokesman.
“While rates might be higher for some members under these new plans, we believe the added consumer protections will be appreciated when health insurance is needed most,” Barry said by e-mail.
About 160,000 Kaiser customers received notices that their current plans would no longer be available, said another spokesman, Won Ha.
The law sets higher standards for coverage that will protect people from financial distress and give them adequate coverage if they fall ill, Covered California’s Lee said.
“It means they have security going forward,” Lee said. “Everyone has plans that they can rely on.”
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