RALEIGH, N.C. – A month after President Barack Obama announced people could keep insurance policies slated for cancellation under the federal health overhaul, the reversal has gotten a mixed response from insurers, state regulators and consumers.
Many consumers complained in October and November after insurers notified them that their individual policies were being canceled because they did not cover pre-existing conditions, hospitalization, prescription drugs or seven other basic benefits required under the law. In pitching the overhaul, Obama had long promised that people who liked their policies could keep them.
Then Obama announced Nov. 14 that companies could continue existing policies that don’t meet the minimum requirements if state regulators approved.
Reporting by The Associated Press shows that older policies are being allowed to continue in 36 states, either because officials allowed it after Obama’s announcement, decided not to intervene in any way or had made a decision earlier in the year to extend non-compliant policies for a period of time.
Even so, insurers were given a choice of whether to continue the policies, and some declined to do so.
In Kentucky, insurers Humana, United Healthcare and Assurant chose to extend old policies while Anthem and Bluegrass Family Health opted against it. Seven companies in South Carolina are extending individual plans the federal law considers substandard, while six companies are extending plans in the small group market. Twenty are not participating.
In North Carolina, only Blue Cross and Blue Shield, which controls about 80 percent of the state’s market for individual and small-business policies, offered to renew plans covering 474,000 people that had been slated for cancellation. North Carolina’s insurance commissioner allowed the company to raise premiums by between 16 percent and 24 percent.
Prices on noncompliant policies are rising in other states, as well. Anthem Blue Cross in Maine plans to raise premiums by an average of 12 percent on its no-longer-canceled policies. The Blue Cross provider in neighboring New Hampshire expects an average 7 percent increase, an amount that is in line with previous years’ premium increases. Blue Cross Blue Shield of Illinois said it would seek undefined price changes.
Raleigh attorney Jeff Poley, 42, says he is fine with paying more for his current policy, considering what it would have cost him to switch to a new one. He has been covered with a high-deductible health policy from Blue Cross for the past two years, which currently costs $137 a month. The plan does not cover maternity and some other benefits required under the Affordable Care Act.
When he initially received a cancellation notice, Blue Cross said the closest plan that met all of the new federal requirements would cost nearly twice as much.
But after Obama’s announcement, Blue Cross offered to extend Poley’s old plan for another year at $170 a month. His wife is covered by a policy through her law firm.
“I was glad for the one-year reprieve, but I would still like a permanent fix because I don’t need abortion coverage, I don’t need maternity coverage,” said Poley, who said he exercises vigorously about six days a week. “We as a family had made that choice, and we are two intelligent people who know better what’s good for our family than the government does.”
About 15 million Americans buy policies as individuals, according to Families USA, a nonprofit organization that backs health reform. Before Obama’s announcement, insurers sent at least 4.7 million policy cancellation notices, according to a tally by the AP. The number is likely much higher because officials in nearly 20 states said they were unable to provide information on cancellation notices or were not tracking it.
Sabrina Corlette, project director at the Health Policy Institute at Georgetown University, warns that Obama’s decision last month could allow younger people with relatively few health problems to stay on bare-bones policies. That could lead to higher premiums in 2015 to offset insurers’ cost of covering people with more health problems, she said.
Still, even before Obama’s announcement last month, a pathway existed for many consumers to hang onto policies that didn’t conform to the ACA requirements, at least for a brief period of time.
Many states allowed insurers to offer early renewals to non-conforming policies, but some of those will expire on March 31. Early renewals are allowing 60-year-old artist Marlys Dietrick of San Antonio and her 21-year-old son to stay in their old policies.
Dietrick jumped at the chance when Humana offered in October to renew her expiring, high-deductible policy early for $315 a month – an increase of about $15. She and her son both must spend $7,000 per year on medical bills to meet a deductible before the company starts paying.
Her insurer told her it would charge $705 a month for a similar policy that met the new standard required under the health care law. She earns too much to qualify for tax subsidies.
“I’m not saying I loved my insurance. I’m just saying I was able to keep the costs down by being able to tailor it to me and my needs,” she said. “I’m 60. I don’t need maternity. I don’t need pediatric. I’m healthy, I don’t need drug coverage. I don’t need mental health. There’s like five things that allowed me to keep my costs down. I was able to pick-and-choose.”
Consumers Union health care reform analyst Lynn Quincy said staying with an existing policy is a natural starting point. But renewing an existing policy with a high deductible or excluding types of coverage needed later may not turn out to be the best deal, she said.
“If your old coverage continued, that’s fine. But look at your other options before enrolling, because you can’t be turned down now” for pre-existing health conditions, she said.