Hundreds of thousands losing health plans due to Obamacare

Hundreds of thousands losing health plans

Flood of cancellation notices despite Obama's promise

To the shock of consumers who believed President Obama’s promise that they could keep their health-insurance plans if they liked them, hundreds of thousands of cancellation notices have been issued since August, according to Kaiser Health News, a service of the health insurance giant Kaiser Permanente.

The letters are going to people who buy their own coverage, which has frustrated many who want to keep what they have and has forced others to buy more costly policies.  The insurers explain that the policies are not in alignment with requirements of Obama’s Affordable Care Act that take effect Jan. 1

Most of the insurers are ending policies sold after the law passed in March 2010. Some are canceling plans sold to people with pre-existing medical conditions. Obamacare forbids insurers from rejecting applicants with pre-existing conditions or charging them higher prices.

Kaiser Health News said an estimated 14 million people purchase their own coverage because they don’t get it through their jobs.

KHN offered several examples:

• Florida Blue 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.
• Insurer Highmark in Pittsburgh is dropping about 20 percent of its individual market customers.
• Independence Blue Cross, the major insurer in Philadelphia, is dropping about 45 percent.

KHN said Blue Shield of California sent about 119,000 cancellation notices out in mid-September, about 60 percent of its individual business.

Spokesman Steve Shivinsky said about two-thirds of those policyholders will see rate increases in their new policies. Consumer advocates charge that insurance companies may be targeting their most costly enrollees.

They may be “doing this as an opportunity to push their populations into the exchange and purge their systems,” said Jerry Flanagan, an attorney with the advocacy group Consumer Watchdog in California.  Insurers contend they are only encouraging existing customers to re-enroll in their new plans. KHN talked to some of the consumers who received cancellation notices and found that their costs will go up, despite the promise of income-based subsidies that are projected to benefit half of all Obamacare enrollees.

“The arithmetic is inescapable,” Patrick Johnston, chief executive officer of the California Association of Health Plans, told KHN. Costs must be spread, he emphasized, so while some consumers will see their premiums drop, others will pay more “no matter what people in Washington say.”  KHN cited health insurance experts who say new prices will vary and much depends on where a person lives, their age and the type of policy they decide to buy. Young people with high-deductible plans may see an increase. Some who currently have health problems may see lower premiums.