The hysteria that envelopes coverage of Obamacare requires a certain level of detachment to separate fact from hyperbole. Today’s controversy over folks getting dropped from their health insurance policies despite President Obama’s promise that “If [you] already have health insurance, you will keep your health insurance” is a perfect case in point. As we know from a report by Lisa Myers of NBC News, that assertion was not exactly correct, and the administration has known this for three years. Yet even Myers takes great pains to point out that these cancellation notices don’t apply to all of the 263 million people with health insurance, just to a sizable percentage of “the 14 million consumers who buy their insurance individually.”
The Obama administration has rightly been catching hell for all manner of a mess-ups related to the Oct. 1 roll-out of the health-care exchanges. And if the president and Health and Human Services Secretary (HHS) Kathleen Sebelius don’t get the issues solved as quickly as possible, then all the good work they have done to get to this point will go up in smoke. But I feel compelled to hand out paper bags to everyone hyperventilating over the Myers report.
The New York magazine headline on a piece by Jonathan Chait says it all: “‘If You Like Your Plan, You Can Keep It.’ Well, Not Exactly.” Chait then explains what “not exacty” means.
The 14 million people in the individual-insurance market may be a tiny percentage of the population, but it’s still a lot of people. As the start date for the new regulations looms at January 1, most of them are receiving cancellation notices. That is a terrifying experience in a country where the cancellation of health insurance has been a disastrous life event roughly on par with losing a job. They are receiving those notices because the regulations Obama promised, and which were the most popular parts of his plan — ending the lifetime caps, the preexisting condition discriminations, and other risk winnowing — ended the individual-insurance market as we know it.
Now, everybody in that market can obtain insurance that does protect them against catastrophe….
As Chait explained in his column, Obamacare was “designed to redress the plight of Americans lacking health security — either because they lacked any health insurance, or because the only insurance they could obtain was so skimpy it failed to make access to necessary medical care remotely affordable.” So, folks are getting cancellation letters that will push them to purchase insurance policies that reflect the new minimum requirements of the Affordable Care Act. Scary? Yes. Fool proof? No. Worth the effort? Absolutely.
At hearings Tuesday on the botched roll-out and other matters, Marilyn Tavenner, the administrator of the Centers for Medicare and Medicaid Services (CMS), dealt with this question in a forthright and compelling manner in response to Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee. He read part of a letter a constituent wrote to him about his wife’s dropped insurance coverage.
Rep. Dave Camp: This man wrote me and said, “My wife has been recently informed by her insurance carrier that her health care policy does not comply with the Affordable Care Act. Now we must purchase a new policy to get the same coverage at an 18 percent increase in our premium. So what happened to ‘if you like your insurance you can keep it’ question?” What would you say to that individual?
Marilyn Tavenner: Well, I would take him back to pre-Affordable Care Act days where, in fact, if you were in the individual market you were living at a 50 percent churn. Half of the people in the individual market prior to 2010 didn’t stay on their policies. They were either kicked off for pre-existing conditions. They saw their premiums go up at least 20 percent a year. And there were no protections for them. And sometimes they were in plans that they thought were fine until they actually needed hospitalization and then they found out it didn’t cover hospitalization or it didn’t cover cancer.
So, I would take them back to the fact that since 1986, their health care costs and coverage have been the number one issue for small businesses for the last 20 to 30 years. And we’ve been talking about it for the last 20 to 30 years. That’s actually why I came into this job is to try to deal with this issue.
So, now what I would say is this: Now, if in fact, the issuer has decided to change the plan, didn’t have to, plans were grandfathered in in 2010 if they didn’t make significant changes in cost-sharing they could keep the plan that they had. But some insurance companies have decided, and I think that’s what you were referring to in your opening statement, that they want to offer new plans. And if they offer new plans they have to come into the requirements of the Affordable Care Act, which are you have to offer the 10 essential coverage benefits, you cannot judge people on preexisting [conditions], you cannot discriminate based on sex. There are lots of things required under the Affordable Care Act that actually protect consumers.
But these premium increases were going on a long time prior to the Affordable Care Act and, in fact, we’ve seen the most premium moderation in the last three years than we’ve seen probably in 15 or 20 years. So, that’s what I would say to them. I would try to explain to them the real issues.
Camp: Well, the carrier told them that the plan didn’t comply so, but nothing you’ve said had anything to do with how they could get their costs down. And I think that’s the real problem that we’re seeing here is the costs are….
Tavenner: So, what I would tell that individual is if their carrier is telling them they’re changing the plan and their offering an increase they would need to go take a look at what’s available in their state and in their market, which is certainly something that’s available to them in the exchange….
That 50 percent churn Tavenner mentioned was widely known. Igor Volsky at ThinkProgress reminds us of a 2010 story in The Hill that HHS estimated that “40 percent to 67 percent of individual policies will lose grandfathered status by 2011.”
Most important, Tavenner delivers a clear explanation of what’s happening. Insurers are changing policies to meet the higher standards and greater security of Obamacare and are increasing their fees as a result. But if folks go to the exchanges they should be able to find an affordable policy that might have a federal subsidy to go with it that would bring the premium down. Sebelius would do well to repeat this incessantly when she testifies before Congress on Wednesday.
Follow Jonathan on Twitter: @Capehartj