Insurance cancellation notices, confusion about Obamacare abound in Pa.
By Luis Fábregas and Alex Nixon
Published: Thursday, Oct. 31, 2013, 12:01 a.m.
Insurers are canceling coverage for thousands of Pennsylvanians who buy their own health insurance and expected to be grandfathered from sweeping changes of the Affordable Care Act.
The cancellation notices are providing fodder for critics of the so-called Obamacare law. They say the result is higher premiums for some people, and they point to pledges by President Obama that individuals can keep their existing coverage if they like it.
But insurers and supporters of the law say that many of those who are being dropped can buy better and cheaper coverage under Obamacare.
Insurers say the law requires them to phase out plans for individuals that don't meet minimum requirements for coverage, such as emergency visits, maternity care and mental health treatment. Others are getting cancellation notices because the law no longer allows individual business owners to buy health insurance in groups.
The developments couldn't come at a worse time for the Obama administration. Health and Human Services Secretary Kathleen Sebelius apologized on Wednesday to Congress for the troubled launch of the health care website, healthcare.gov. As she spoke to a House committee, people who tried to log onto the site got this message: “The system is down at the moment.”
“What we hear overwhelmingly is just confusion, said Steven Shivak, president of SMC Business Councils, a trade association based in Churchill. The group had been able to buy insurance for its more than 250 members, most of them individual business owners and their spouses.
“People are confused because the cancellation notices don't give them a specific answer. The first thing you see, the emotional charge is, ‘I'm being canceled.' And you think, ‘You're kidding me,' ” he said.
Those affected, including 40,000 people previously covered by Highmark Inc., have been directed to buy coverage through the troubled online exchange or by calling a toll-free number.
Those plans, which expire at the end of the year, were sold to people with pre-existing conditions. Insurers are expected to roll out new plans at new prices for those customers, many of whom the government and insurers say should pay less based on federal subsidies — though some will pay more.
“No one should panic,” said Jim McTiernan, area vice president at Triad Gallagher, a Downtown benefits consulting firm. “What the insurance companies are doing is really perfectly legitimate and logical.”
Sebelius told the House committee that the cancellation notices do not contradict Obama's repeated promise that the health care overhaul would allow Americans to keep their current health insurance.
Just before the hearing, Rep. Tim Murphy, R-Upper St. Clair, read an email from a constituent who'd received a cancellation notice. Murphy described the email from the single mother as moving and emotional. He said the woman, who had not given authorization for her name to be released, had to buy more expensive coverage from the exchange.
“It's not a glitch, it's a disaster,” Murphy told the Tribune-Review later. “People are seeing the sticker shock.”
The Obama administration has countered that individuals whose policies existed prior to 2010 can be grandfathered into the new law to keep their existing coverage as long as it had not drastically changed. Murphy doesn't buy the argument.
“Grandfathering is for a plan that doesn't change in cost or coverage,” he said.
Highmark, the Pittsburgh region's Blue Cross-Blue Shield provider and the state's largest health care insurer, has sent notices telling 40,000 Pennsylvanians with its so-called “guaranteed-issue” coverage that they will have to shop for a new plan. Philadelphia-based Independence Blue Cross says it has told 24,000 members their plans are being phased out.
Highmark spokeswoman Kristin Ash said its guaranteed-issue customers will find better insurance at lower rates because all insurers starting Jan. 1 will have to cover individuals regardless of their medical conditions.
“These new plans will be lower cost for those sick individuals,” she said.
An additional 140,000 healthier individuals with different plans will have one more year before they switch over, she said. Their plans will disappear by the end of 2014. Because they are healthier, those individuals would likely have had to pay more if they switched to a new plan before the end of the year, she said. That's because federal law prohibits insurers from screening people's health status before offering a price.
UPMC Health Plan spokesman William Modoono said most individual plans issued by carriers today do not meet the minimum coverage required by the Affordable Care Act. He declined to say how many individual customers buy coverage from UPMC Health Plan.
Aetna Inc. and its Coventry and HealthAmerica subsidiaries are informing individual policyholders that they can renew for one more year, but then their current policies will disappear.
“Some plans are being replaced because they no longer comply,” Aetna spokesman Walt Cherniak said. “No one is being thrown off a plan.”
The plans for sole business proprietors, which were typically sold through associations, aren't allowed under Obamacare, said Highmark's Ash. Several hundred members of those plans have been notified so far, and more will be notified in coming months, she said.
Shivak said most of the business members he's been helping have been pleased once they understand their options. Some are choosing to stay with their plans for an additional year because they are concerned about the instability of the federal website.
“If they have an increase, and it's something you can swallow and they're comfortable with what they have in terms of coverage, then why would you change?” he said.
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