Back when insurance companies were planning for Obamacare, the Affordable Care Act gave them the option to "grandfather" some of their existing health plans. As long as the company filed its plans with their state's insurance commissioner, people could stay on them, even though the plans don't comply with ACA rules.
While insurance companies took advantage of this option to grandfather their best plans -- plans popular with consumers that also did well on the company's bottom line -- they also decided to cancel some health plans, and notice the subscribers that they should look for new ACA-compliant coverage on the healthcare marketplace.
Hundreds of thousands of cancellation letters went out to consumers, reports Kaiser Health News, and many are not happy.
"By all accounts, the new policies will offer consumers better coverage, in some cases, for comparable cost -- especially after the inclusion of federal subsidies for those who qualify. The law requires policies sold in the individual market to cover 10 “essential” benefits, such as prescription drugs, mental health treatment and maternity care. In addition, insurers cannot reject people with medical problems or charge them higher prices. The policies must also cap consumers’ annual expenses at levels lower than many plans sold before the new rules.
"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.
"An estimated 14 million people purchase their own coverage because they don’t get it through their jobs.
"Florida Blue, for example, is terminating about 300,000 policies, about 80 percent of its individual policies in the state.
"Independence and Highmark are cancelling so-called “guaranteed issue” policies, which had been sold to customers who had pre-existing medical conditions when they signed up. Policyholders with regular policies because they did not have health problems will be given an option to extend their coverage through next year.
"Consumer advocates say such cancellations raise concerns that companies may be targeting their most costly enrollees.
"They may 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.
"Insurers deny that, saying they are encouraging existing customers to re-enroll in their new plans.
"Health insurance experts say new prices will vary and much depends on where a person lives, their age and the type of policy they decide to buy. Some, including young people and those with skimpy or high-deductible plans, may see an increase. Others, including those with health problems or who buy coverage with higher deductibles than they have now, may see lower premiums." Read the story.