Insurance cancellations due to Obamacare

usa-flag-flying-1387469-mThe rollout of the Affordable Care Act (ACA, also known as Obamacare) is leading to the cancellation of hundreds of thousands of health insurance plans nationwide, which contradicts President Barack Obama’s pledge that people who like their coverage can keep it. Due to the online site that is expected to face continuing difficulties until the end of November, Americans may have only weeks to find replacement coverage, which may cause many to end up paying higher premiums. It was Obama’s oft-repeated pledge that was his central selling point of his health-care overhaul to calm consumers who feared being forced to give up policies. Although it is still unclear how many consumers face cancellation of their insurance nationally, some individual carriers have released data. Ever since the ACA rollout, it has become a non-stop trainwreck of failed websites, higher premiums and canceled policies.

 It was in an August 2009 teleconference with the Washington-based National Council of Churches, Obama said, “If you like your health-care plan, you can keep your health-care plan. Nothing that we’re doing obligates you to choose any plan other than the one that you have.” Currently, millions of Americans can expect to receive termination notices because their current coverage does not meet the standards mandated by the new healthcare law. Supporters of the healthcare law say Obama was referring to people who are insured through their employers or through government programs such as Medicare. Still, they acknowledge the confusion and anger from individual policyholders who are being forced to change. This was probably the Obama administration’s political intention in the first place and it worked with the help of President Obama’s repeated falsehood that people who liked their health plans could keep them.

In the individual market, it provides coverage to more than 19 million people who purchase health insurance policies on their own. That is about roughly 5 percent of the population. At first, they typically purchase a 12-month contract with an insurance company, and when that contract runs out, both the consumer and the insurance plan have an escape hatch. The consumer can decide to no longer purchase the plan — and the insurance company can decide to no longer offer the plan. And since individual health insurance is not subsidized by employers, each consumer must pay the entire cost of the premium. Most people who do not have employer-sponsored coverage only purchase individual market coverage when they anticipate needing medical services.

There are some restrictions on how insurance companies can terminate products. The Health Insurance Portability and Accountability Act of 1996 (HIPAA), a health law signed in 1996, protects workers and their families their health insurance coverage and offers them to renew their policies, as long as they continue to pay monthly premiums. But now, insurance plans are sending out notices to hundreds of thousands of subscribers: notices saying that they do not plan to offer the policy anymore, and information about what policies will be available. Due to recent insurance policy cancellations, President Obama just apologized to those whose insurance plans are being canceled. Since he assured them in previous years that they would be able to keep their plans, it brought controversy around the ACA that Congress must address.

Many plans have stuck around for a little bit. If plans that existed back in March 2010, the health law allowed it to keep selling coverage, which are known as “grandfathered” plans: They don’t meet the health law’s requirements, but as long as they haven’t changed in ways that substantially cut benefits or increase costs for consumers, insurers can keep offering them and must notify consumers with these policies that they have grandfathered plans . Essentially, these cancellations are a lot of grandfathered plans, which are exiting the insurance marketplace. From an insurance company’s point of view, there’s no reason, in a business sense, to maintain a health plan that doesn’t meet the health law’s new requirements.

Under Obamacare, individual-market health coverage will feature plans that are more expensive than the ones offered under the old system. It seems like the government wants policies to cost more and drive many people as possible out of this market and into the subsidized Obamacare exchanges. Although it is hard to put an exact number, experts estimated that somewhere between half and three-quarters of those who currently buy their own policies will not have the option to renew coverage, which is around 7 to 12 million people. Due to the direct result of the Affordable Care Act, insurance companies are forced to change their plans under the health-care law or they will go for the government exchanges.

President Obama has repeatedly said, since the health law passed, that if people like their insurance they could keep it. But ever since the Obamacare rollout, the administration knew that many policies would be changed since one of the key goals of the health-care law is to change individual market insurance coverage. Especially on the individual market, there are lots of insurance policies that really basic and lacks many health benefits, and Obama has blamed “bad apple” insurers for the cancellations. According to the Department of Health and Human Services in 2011, it noted that 62 percent of individual market plans don’t offer maternity care, eighteen percent do not cover mental health benefits and 9 percent do not pay for prescription drugs. Due to the health-care law with 10 very broad categories, it requires insurance plans to cover all of those things.

None of this is an accident. Obama deliberately misrepresented his signature legislative accomplishment. It is such a liberal demand that everyone must essentially have the same insurance and how much it costs. Obamacare does not seem capable of doing what it was supposed to do, being affordable or even desirable for a whole bunch of people. It is such a tall order, and that is why most people can’t keep the insurance they have and must be pushed out of their existing individual-market plans. President Obama made a lot of promises (again and again) to get the law passed, in order to push toward his final, ultimate goal: the whole country on a single, government-run health care system.

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