The Obamacare Victims

The President apologized for all those Americans who were dropped from their insurance plans recently.  He had assured us that "if you like your insurance, you can keep your insurance; if you like your doctor, you can keep your doctor." As insurance companies sent out millions of notices telling their clients their policies would end on December 31st, the President vowed to work to fix the problem.

It's an intriguing problem. It has nothing to do with the majority of Americans who are covered under their employers' plans or by Medicaid, Medicare or through their veterans' benefits. The victims are those whose employers do not provide insurance, who make too much to qualify for Medicaid or are self-employed. There are an estimated 12 million such individuals. What do we know about them?

8 million of these will likely pay less for better coverage, partly because their income qualifies them for federal subsidies and partly because they now have a single site to compare policies. The other 4 million will pay more, but for substantially better coverage.  Their old individual insurance marketplace policies by and large looked like this (averages given for Oregon):

Coverage for an Individual Only:

 Monthly Payment:   $   180
 Annual Deductible:   $4,800
 Family Coverage
 Monthly Payment:  $   380
 Annual Deductible:  $4,900

 Women paid up to 30% more than men and millions couldn't even get individual policies because of allergies, diabetes, smoking, age, occupational hazards or other "pre-existing conditions".  Those folks now have access to the insurance marketplace since the law outlaws such denials.  Another 7 million will be eligible for free insurance (free to them) who were not qualified previously for Medicaid.  But the big hullaballoo right now is about the estimated 4 million who will likely pay more for insurance.

Those folks are receiving letters from their insurance carriers not only cancelling their current plans, but blaming Obamacare for their new bills, sometimes ten times what they'd been paying before! Essentially, that's a scam. They don't want their customers to shop around or comparison shop at the exchanges.  They're counting on all the scare tactics repeated ad nauseum to convince folks that they're doomed and they have no other options.

Here’s how this scam works.

How this scam works is that private insurance companies send out letters notifying existing customers that their current policy has been canceled, because of the ACA’s new requirements. They then offer customers a new, ACA compliant policy at far higher rates than what the customer would pay if he went through the ACA marketplace. In most cases the insurance companies do not tell their customers what other options are available or even let them know they have a choice under the new law. Some insurance companies have pressed their customers to sign up for the new policies by a certain date, saying if they don’t, their health coverage will be lost.

 Consumer Reports found her a policy for $165.00.

On the program, Barrette tells CBS that she has to hurry and make up her mind by November 1st or she will lose out on her chance to buy in. CBS offered her no explanation of her alternatives, but Consumer Reports examined Barrette’s story shortly after it aired. They easily found her a policy in the Marketplace for $165.00, not the $591 Blue Cross Blue Shield was shamelessly going to charge her.
What’s more, Consumer Reports also looked at her old policy, the one she was paying $54 a month for. They determined that it was “junk.” In essence, Barrette had been paying one of these corrupt private insurance companies  nearly $650 per year, to have almost no real medical coverage, under her previous Blue Cross Blue Shield policy.

So what is changing that could cost those 4 million more? Their policies now have to include minimum essential health benefits:
  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care
Few existing individual policies include maternity care (18%) and few include rehabilitative care or preventive services.  Chronic disease management is a non-starter since a chronic disease means you're not even eligible. In fact, with their high deductibles, it's likely the policies pay for very few of these. Many are what are referred to as "junk policies", policies you can't expect to cover any of your costs.

Sadly, 60% of the Americans who declared bankruptcy due to medical bills were in fact insured, nearly all of them on these substandard policies.

The Kaiser Family Foundation has an excellent (and quick) estimator that will show your costs and the government subsidy you can expect.  I did two calculations, one for a family of four and one for an individual.  I used $50,000 for income in both cases, yielding a federal subsidy for the family of four but none for the individual.  Even with the Bronze Plans (fairly inexpensive in both cases), the individual would have coverage far superior to the typical individual plan now on the market.

IncomeAdults age 40ChildrenSilver PlanBronze Plan
Family of 4$50,000 22$280 $115

One adult$50,000 10$220 $165 

Why is it so hard to get accurate information from our media about something so critical to every American family? Why the attention on what sleazy insurance companies are doing with little to none on why or what options people have?

When the Affordable Care Act was approved, it grandfathered policies in existence.  Those policies could, as the President promised, continue without adapting to the new requirements.  Unfortunately, implementation took three years more and most insurance companies altered their policies over that time, eliminating the grandfathering opportunity.  Now they are using the law as an excuse to overcharge customers, leading in at least a few cases, to significant court judgements against the companies.