Millions Facing Huge Costs, Lost Coverage Thanks to Obamacare Upheaval
Monday, 28 Oct 2013 06:22 PM
By Lisa Barron
Thousands of consumers in California are quickly learning the downside to Obamacare as they face significantly higher health insurance bills.
In particular, middle-class Californians with individual health coverage are discovering they need policies that cover more and cost more — if they're not dropped from their insurance altogether, reports The Los Angeles Times.
"This is when the actual sticker shock comes into play for people," Gerald Kominski, director of the UCLA Center for Health Policy Research, told the newspaper, adding, "There are winners and losers under the Affordable Care Act."
So far, based on reports from those who are counting, there are far more losers than winners. As Forbes reports: "Over 500,000 individuals have seen their insurance policies canceled in just 3 states. In all 50 states, only 476,000 applications have been 'filed' in an exchange."
Across the nation, major insurance companies are severely slashing individual policies. In Florida, insurance carrier Florida Blue has sent out 300,000 cancellation notices — representing 80 percent of its individual coverage policies in the state. Kaiser Permanente of California canceled 160,000 plans — half of the company's individual insurance plans in the state. In Pennsylvania, Insurance Highmark in Pittsburgh recently announced plans to cancel 20 percent of its individual plans, while Independence Blue Cross in Philadelphia announced the cancellation of 45 percent of its equivalent plans.
This comes at a time when the overall number of employer-based plans being offered is shrinking, according to the National Institute for Health Care Reform. Since 2007, the percentage of children and working-age adults in the United States with employer-sponsored health insurance dropped from 63.6 percent to 53.5 percent. Since 2010, the percentage has actually dropped at a sharper rate because of fallout from the Great Recession.
"This is just the beginning, however, of the Obamacare collapse in health insurance coverage," writes Peter Ferrara of Forbes, who maintains that Obama owes an apology to Sen. Ted Cruz, the leading opponent of Obamacare. The Congressional Budget Office "estimates that as many as 20 million will lose their employer-provided health insurance under Obamacare. Former CBO Director Douglas Holtz-Eakin estimated in a study for the American Action Forum that the number will be 40 million."
Many are being dropped from their current plans because of several factors tied to the Affordable Care Act, including regulations that individual policies cover a higher percentage of overall medical costs.
Avik Roy of the Manhattan Institute, a leading healthcare expert, recently estimated that, based on market data alone, Obamacare is increasing insurance premiums by 99 percent for men, and 62 percent for women. Another study, from the American Action Forum, calculated that the Obamacare increases for individual health insurance policies to be 193 percent for women on average, and 260 percent for men.
The increases largely are a result of the regulatory requirements of Obamacare, which touts "free" check-ups, "free" preventive care, "free" contraceptives, and prescription drugs, mental-health treatments, and maternity care, among others, Ferrara points out.
Blue Shield of California reportedly sent termination letters to 119,000 customers last month whose plans don't meet the new federal mandates, prompted by a requirement from Covered California, the state's new insurance exchange.
"People could have kept their cheaper, bad coverage, and those people wouldn't have been part of the common risk pool," Peter Lee, executive director of Covered California, told The Los Angeles Times. "We are better off all being in this together."
Those who are now forced to shop for replacement plans don't agree.
"All we've been hearing the last three years is, if you like your policy you can keep it," one real estate agent told the Times. "I'm infuriated because I was lied to."
Consultants hired by the state reportedly concluded that new premiums will jump largely because of an influx of sicker patients as a result of guaranteed coverage. Bob Cosway, a principal and consulting actuary at Millman Inc. in San Diego, estimated the average individual premium in 2014 will rise 27 percent because of that factor alone.
Lower-income families, meanwhile, will gain access to comprehensive coverage at little or no cost. The federal government picks up much of the bill through an expansion of Medicaid and subsidies to people earning up to four times the federal poverty level, roughly $46,000 for an individual or $94,000 for a family of four.
The discrepancy has already prompted some in the state, including San Francisco Chronicle financial advice columnist Kathleen Pender, to encourage those with individual plans to lower their income.
Under the ominous headline, "Lower 2014 income can net huge health care subsidy," Pender wrote, "People whose 2014 income will be a little too high to get subsidized health insurance from Covered California next year should start thinking now about ways to lower it to increase their odds of getting the valuable tax subsidy."
Among the options, according to Pender, is to "consider reducing your 2014 income by working just a bit less."
Others may simply elect to go without coverage if they feel the prices are too high, as penalties for opting out are relatively small at the outset. Large scale defections could in turn cause rates to skyrocket even further if a significant number of middle-class individuals don't sign up at all.
Pam Kehaly, president of Anthem Blue Cross in California, told the Times she received a letter from a young woman complaining about a 50 percent rate hike related to the healthcare law.
"She said, 'I was all for Obamacare until I found out I was paying for it,'" Kehaly said.