Over the past three months, hundreds of thousands of Americans who buy their own health insurance have received cancellation letters from their insurance providers. Some will be automatically enrolled by their provider in an alternative (and, in most cases, more costly) plan, while others will have to shop around for a new option.
The cancellation notices have shocked and outraged many Americans, particularly in light of President Obama’s repetitive promises that they would be able to keep their plans if they wanted.
“I don’t feel like I need to change, but I have to,” said Jeff Learned, a television editor in Los Angeles, who must find a new plan for his teenage daughter, who has a health condition that has required multiple surgeries.
An estimated 14 million people purchase their own coverage because they don’t get it through their jobs. Calls to insurers in several states showed that many have sent notices.
Florida Blue, for example, is terminating about 300,000 policies, about 80 percent of its individual policies in the state. Kaiser Permanente in California has sent notices to 160,000 people – about half of its individual business in the state. Insurer Highmark in Pittsburgh is dropping about 20 percent of its individual market customers, while Independence Blue Cross, the major insurer in Philadelphia, is dropping about 45 percent.
For the most part, insurers are explaining that the reason for so many cancelled policies is that they do not meet the minimum requirements listed by the Affordable Care Act.
Some consumer advocates give another reason, saying that insurance companies are using this as an opportunity to dump their most costly enrollees. For example, both Independence and Highmark are cancelling their “guaranteed issue” policies, which were sold to customers with pre-existing medical conditions.
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.
Insurance companies have denied that they are “purging their systems” or dumping any of their customers, saying that they are encouraging these people to re-enroll in one of their other plans. Insurers are maintaining that these plans will offer “richer benefits” and “in most cases, will be at a lower rate.”
However, many of the customers being dumped are saying the costs of their new plans will be higher, even with the Obamacare subsidies, if applicable. It makes sense; because the plans are offering a wider range of services, of course they are going to cost more.
I think the main problem goes back to the #1 complaint from these dumped customers. They are being forced to pay for more benefits, even though they don’t want or need to. The “you can keep your own plan” selling point, whether on purpose or by accident, was a lie. The result of all this? A lot more people shopping for insurance, and a lot more unhappy customers.