The news stories were damning.
“Health insurers across the country,” began one, “are dramatically increasing rates and slashing benefits for many of the estimated 17 million consumers with individual insurance policies, while making it almost impossible to obtain affordable alternatives.”
Yet another Obamacare horror story, right?
No, that was the Los Angeles Times in February 2010, before Obamacare passed.
That is worth remembering as nearly 1 million Californians who don’t get insurance through their employer or through a government-sponsored plan (Medicare, Medi-Cal or military), but through the individual market, are now receiving cancellation notices.
We’ve carried complaints from people in our area, both in news stories and in letters to the editor. Some people have gotten notices from their insurance providers saying their policies were canceled and their new policies will cost substantially more. It is perfectly understandable that these people are angry and worried.
But there’s a key piece of advice being ignored by many consumers: You need to shop around. The letters from your insurers may not provide the full list of your options. Insurers have an interest in trying to lock people into expensive plans before consumers comparison shop on the new state exchange, Covered California.
As Insurance Commissioner Dave Jones told The Sacramento Bee’s editorial board last week, many insurers are using cancellation notices to steer people to non-exchange plans with narrower doctor and hospital networks and with worse deductibles and copays. As an afterthought, they might hint that you can also shop in the exchange.
Individuals purchasing plans in the individual market tend to be self-employed, students, retirees not yet eligible for Medicare, the unemployed, people between jobs, and those who are employed but do not take their employer-offered insurance.
And while those who get insurance through their employer or from a government-sponsored plan are heavily subsidized – the employers are able to negotiate better rates and then the employers pay much of the share – those in the individual market in the past have had to pay the full “sticker price” for their insurance – without many of the protections of other insurance.
The Affordable Care Act does change things, and there will be some winners and some losers. Jones estimates that 300,000 to 400,000 of those getting cancellations would be eligible for subsidies if they buy a plan on the exchange. Some can get free or nearly free plans once subsidies are factored in.
That leaves 700,000 to 800,000 individuals with cancellations who would not be eligible for subsidies. Some of them can get better insurance at a better price on the exchange. Others will pay about the same for similar coverage.
But everyone, including President Barack Obama and Health and Human Services Secretary Kathleen Sebelius, should be honest about the fact that some will pay more for similar coverage. Why? Because the pool includes young and old, sick and healthy people. Insurers no longer can discriminate.
That’s a good thing, but it does mean some people who benefited from the discrimination of the past will pay more in the future. Covered California has been upfront about that. Executive Director Peter Lee said that if you compare the harm to families who faced catastrophic health expenses in the past with the cost increases to some under the Affordable Care Act, “boy, do I feel that we are on the right side of the scales.”
As we make our way through this rough Affordable Care Act transition, let’s keep our eyes on the prize – improving access to quality, affordable insurance for millions of Americans and ending discriminatory insurer practices of the past. A number worth remembering: 22 percent of Californians who tried to buy insurance on their own in the past were denied, according to a report by the Kaiser Family Foundation. Health care reform was needed because too many people simply could not get insurance.