A good place to start is to estimate who is affected by the ACA. The New Yorker interviewed MIT economist and health-care expert, Jonathan Gruber. He breaks it down as follows:
80% of Americans will be largely unaffected. They are already covered by employers (or perhaps Medicare.)
14% are uninsured and the A.C.A will give them access to affordable healthcare. They are clear winners.
6% buy their own insurance. Half (about 3%) will have little change. The other 3% will have to buy different plans.
It is tempting, of course, to price insurance by the premiums, but, just as a cheaper car constantly needing expensive repairs may be no bargain, so too insurance with low premiums, high deductibles, high copays, low caps, and stingy claims processing can be more expensive to own than real insurance with reasonable deductibles, copays, and caps. The quality of insurance can matter a lot: the leading cause of bankruptcy in this country, and bankruptcy happens to people who are on insurance. Crumby insurance.
Oh, and subsidies. Many people are eligible for subsidies.
We have been hearing two things: The ACA allows healthcare plans to be grandfathered and companies are canceling plans because they are not up to the ACA standards. How could these both be true?
Grandfathered plans do not have to offer free coverage for preventative care or guarantee a right to appeal, but they must do the following:
- End lifetime limits on coverage
- End arbitrary cancellations of health coverage
- Cover adult children up to age 26
- Provide a Summary of Benefits and Coverage (SBC), a short, easy-to-understand summary of what a plan covers and costs
- Hold insurance companies accountable to spend your premiums on health care, not administrative costs and bonuses
Remind me, again, who really needs a health insurance that can be arbitrarily canceled by the insurer? If the insurance company can do that to you, what you have is not really insurance. It’s just a bit of hope you pay premiums on.
At least two of these features, coverage of adult children and ending lifetime limits, were already being phased in beginning in 2010.
Insurance Company Scams
It works like this. You tell your individual subscribers in September that their plans are coming to an end — perhaps due to the ACA. You then tell them that can automatically be enrolled in a newer but more expensive plan. They should do that right away! The idea is that you lock your subscribers in to more expensive plans before the health care exchanges roll out and they wander off to competing insurance companies.
Under the title “Policy cancellations, higher premiums add to frustration over Obamacare”, CBS introduces us to Dianna Barrette:
Last month, she received a letter from Blue Cross Blue Shield informing her as of January 2014, she would lose her current plan. Barrette pays $54 a month. The new plan she’s being offered would run $591 a month — 10 times more than what she currently pays.
Barrette said, “What I have right now is what I am happy with and I just want to know why I can’t keep what I have. Why do I have to be forced into something else?”
Consumer Reports took a look and found
Barrette’s expiring policy is a textbook example of a junk plan that isn’t real health insurance at all. If she had ever tried to use it for anything more than an occasional doctor visit or inexpensive prescription, she would have ended up with tens or hundreds of thousands of dollars of medical debt.
- The plan pays only the first $50 of doctor visits, leaving Ms. Barrette to pay the rest. Specialist visits can cost several hundred dollars.
- Only the first $15 of a prescription is covered. Some prescriptions can cost hundreds or even thousands of dollars a month
- The plan only pays for hospitalization for “complications of pregnancy,” which are unlikely given Ms. Barrette’s age and in any event only the first $50 is covered.
- It pays $50 for a mammogram that can cost several hundred dollars, and only pays $50 apiece for advanced imaging tests such as MRIs and CT scans and then only when used for osteoporosis screening.
“She’s paying $650 a year to be uninsured,” Karen Pollitz, an insurance expert at the nonprofit Kaiser Family Foundation, said. “I have to assume that she never really had to make much of a claim under this policy. She would have lost the house she’s sitting in if something serious had happened. I don’t know if she knows that.”
Happy ending. As more details came out Ms. Barrette became more informed too. Jonathan Cohn at the New Republic: “But as she’s become more aware of her options, she said, she’s no longer aghast at losing her plan—and curious to see what alternatives are available. ‘Maybe,” she told me, “it’s a blessing in disguise.'”
One famous anecdote was provided by Edie Sundby, a survivor of stage 4 gallbladder cancer who wrote an oped for the Wall Street Journal. She reports that the five-year survival rate for her kind of cancer is 2% after diagnosis. She is lucky to be alive. She writes:
My affordable, lifesaving medical insurance policy has been canceled effective Dec. 31.
My choice is to get coverage through the government health exchange and lose access to my cancer doctors, or pay much more for insurance outside the exchange (the quotes average 40% to 50% more) for the privilege of starting over with an unfamiliar insurance company and impaired benefits.
She attributes her survival to doctors at a wide number of locations: University of California in San Diego, Stanford University, and a center in Houston. (“Stanford has kept me alive—but UCSD has provided emergency and local treatment support during wretched periods of this disease.”) All this was provided through her United Healthcare PPO which has spent $1.2 million on her care.
ThinkProgress points out
But Sundby shouldn’t blame reform — United Healthcare dropped her coverage because they’ve struggled to compete in California’s individual health care market for years and didn’t want to pay for sicker patients like Sundby.
The company, which only had 8,000 individual policy holders in California out of the two million who participate in the market, announced (along with a second insurer, Aetna) that it would be pulling out of the individual market in May. The company could not compete with Anthem Blue Cross, Blue Shield of California and Kaiser Permanente, who control more than 80 percent of the individual market. “Over the years, it has become more difficult to administer these plans in a cost-effective way for our members,” UnitedHealth spokeswoman Cheryl Randolph explained. “We will continue to keep a major presence in California, focusing instead on large and small employers.”
United Healthcare also fears that early enrollees will demonstrate adverse selection. Their CEO expects “first enrollees will have a ‘pent-up appetite’ for medical care.”
It’s difficult, too, to generalize from Ms. Sundby’s rather atypical circumstance and experience. It is, in fact, unknowable whether Stanford was or was not essential to her surviving stage 4 cancer. Would she have survived without their support? Not impossible.
In any case, there’s some evidence that Blue Shield of California’s Gold 80 PPO plan would cover her just fine.