I think there are two important points that are missing from the intense media focus — and now the White House response – to the problem of the insurance cancellation notices on the individual market. Both are the result of actions that have been taken by insurance companies which are now participating in the exchanges — in other words, they are barriers to acceptance of ACA created by the same insurance companies that are the chief beneficiaries of the new, heavily subsidized insurance market.
The promise that “if you like your insurance, you can keep your insurance” was essentially written into the law, by the express terms of the original ACA legislation. There was a “grandfather” clause which expressly allowed consumers to keep whatever plans they were enrolled in prior to March of 2010, subject to some requirements to strengthen those plans.
The problem is that many consumers who buy their own insurance on the market have switched plans since then, giving up their grandfathered status. It’s not that they didn’t like the plans they had; rather, those plans got too expensive. So very often the switch was to another, seemingly better or less expensive plan offered by the same company.
In hindsight, it seems that the offers of the new, non-grandfathered policies were intentional. As writer Kevin Drum speculates,
I think that most of the canceled policies have been canceled because insurance companies wanted to cancel them. They were designed in the first place to entice buyers away from their old grandfathered policies, and insurance companies did this explicitly so that they would be free to cancel them when 2014 rolled around. This allowed insurers to replace them with more expensive policies without taking any heat for it. They could just blame it on Obamacare.
This policy-swapping provided an additional financial benefit to the companies that chose to participate in the health marketplaces: a ready source of customers for the new ACA plans. This is reflected in the practice of the rollover offer: most of the cancellation letters include a default plan to roll the consumer over into a new, more expensive plan sold by the same company.
The second insurance-created problem is the shrinking provider network. Although premium prices have gone up for many consumers, others will be eligible for significant subsidies that may reduce their premiums well below anything they have paid in years. Unfortunately, however, they may not be able to see the same doctors. Insurers which have had market dominance in their states for years are trimming their provider networks. These are the major facilities that took every insurance — now, suddenly, they are off-network.
I think that many consumers would understand the higher premiums — after all, that’s part of the price of guaranteed insurability for all. But losing access to the leading hospitals or health facilities in one’s home community is harder to swallow.
I don’t think that an extension of the grandfather provisions will do anything to address the true problems. An annual premium increase is nothing new — but in the past, those PPO provider networks were fairly stable.
I understand the pressures on insurance companies to hold down costs. I consider the negotiated rates between the insurer and network providers to be one of the chief benefits of having insurance: I’m unlikely to even meet my deductible in any given year, but I see the benefit of having insurance when I receive an Explanation of Benefits showing that my $375 lab bill has been reduced to $65, or that I owe my doctor $40 for a visit instead of the $200 that the doctor would like to bill.
But my doctor’s name isn’t even on any of the new networks. I can’t figure out whether this is because my doctor has decided not to participate, or simply a lag in paperwork — but the point, word is out that the networks are being reduced. We patients don’t really care about which company sells us insurance, but we do care about the providers who treat us.
So I’d propose this fix: a regulation that extends the same benefits that the law requires for out-of-network emergency care to treatment from any doctor or facility which had established a continuing relationship with the patient prior to implementation of ACA. If the medical records show that the patient received care from a particular doctor or hospital at any time in 2013, then that patient should be able to continue to see the same provider in 2014 – at least if the patient chooses to sign up for any type of plan other than an HMO. This doesn’t mean that that provider needs to give the out-of-network provider the same “preferred” status — a tiered system of patient copays might suffice to encourage consumers to see the doctors the insurance companies prefer — but at least the patient should be assured of continuing care with the shift to an ACA-compliant plan.