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Sometimes, Even If You Like Your Insurance, You Can’t Keep It

05 Nov

Perhaps one of the most frustrating parts of being President is that your every waking moment is documented. Consequently, when you say something, and it subsequently turns out not to be quite true, you can expect that your opposition will take advantage of the opportunity to make you look like the American people can’t trust you. That’s precisely what has happened in the last week or two as some 3.5 million individuals report receiving cancellation notices from their insurance company, despite President Obama’s assurance early in the health reform debate that if you like your coverage, you can keep it.

There’s no disputing that the President overstated things and that his words are being used against him, but the issue is a bit more complex than that, and that’s what I’m going to address here. In particular, I want to move past the idea of broken Presidential promises and focus instead on the details of why insurance companies have been cancelling policies and what it means for the individuals affected.

The simple explanation is that the plans that were cancelled did not meet federal requirements under the ACA. This could happen for a number of reasons, but the primary one is that the plans did not meet the minimum actuarial value of 60% and/or did not cover all of the essential health benefits outlined in the law. That means, to put it even more simply, that individuals covered by these plans would be underinsured. But to people who were fortunate enough not to have to test the limits of their coverage, the inadequacy of their benefits isn’t apparent. In fact, one might argue that the coverage was perfectly adequate in practice, if not in theory.

So what’s happening now? The ACA is making these less than adequate plans illegal, and requiring individuals to obtain more robust coverage. Of course, the big concern among consumers is that this may be more expensive. Whether or not that’s the case will depend on numerous factors like where the individuals live, how much money they earn, and whether affordable coverage is available to them through an employer. Depending on the answers to those questions, individuals may find that they are eligible for Medicaid at no cost to them, eligible to purchase heavily subsidized private coverage through the health insurance exchange, or able to obtain affordable coverage through their employer. For many individuals, the price they’ll pay for insurance will go down. Of course, for others it will increase. But in all cases, the individuals will have substantially better coverage that will be there for them in the event that they ever need it, and that’s the true purpose of having insurance.

For those who want a more detailed understanding of the issue, I highly recommend two pieces by Jonathan Cohn. The first will provide you an overview. The second will give you some anecdotal insight into the complexities of the issue.

 

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3 responses to “Sometimes, Even If You Like Your Insurance, You Can’t Keep It

  1. george

    November 6, 2013 at 12:55 am

    a very informative post. i think you need to be more forthcoming on what “more robust coverage”
    is?

    Many of the elements covered by the basic plans (including child birthing and pediatric coverage) probably are not needed by many individuals (particularly older ones) that purchase plans. Further, many of the basic health benefits, such as accunpuncture in California, have little or no evidence in helping individuals. I would like to hear why you think people should have to pay for individuals to receive treatment that lacks a relevant evidence base and was more a function of rent seeking than sound policy making. Thank you.

     
    • Brad Wright

      November 6, 2013 at 1:19 pm

      Ugh. I wrote a very lengthy reply to you and it vanished. Bottom line is we’re moving from experience rating to community rating and that’s more equitable for everyone. I agree that evidence-based care should be a standard we move towards, but note that coverage for acupuncture is not available in all states. This was a decision California–not the federal government–made.

       

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