RALEIGH, N.C. — A month after President Barack Obama announced people could keep insurance policies slated for cancellation under the federal health overhaul, the reversal has gotten a mixed response from insurers, state regulators and consumers.
Many consumers complained in October and November after insurers notified them that their plans were being canceled because they didn’t cover pre-existing conditions, hospitalization, prescription drugs or seven other basic benefits required under the law. In pitching the overhaul, Obama had long promised people who liked their policies could keep them.
Then Obama announced Nov. 14 that companies could continue existing policies that don’t meet the minimum requirements if state regulators approved. Officials in 27 states responded by allowing insurance companies to extend the non-compliant policies for another year.
Insurers in those states were given a choice of whether to continue the policies, and some have declined.
In Kentucky, insurers Humana, United Healthcare and Assurant chose to extend old policies while Anthem and Bluegrass Family Health opted against it. Seven companies in South Carolina are extending individual plans the federal law considers substandard, while six companies are extending plans in the small group market. Twenty are not participating.
In North Carolina, only Blue Cross and Blue Shield, which controls about 80 percent of the state’s market for individual and small-business policies, offered to renew plans covering 474,000 people that had been slated for cancellation. North Carolina’s insurance commissioner allowed the company to raise premiums by between 16 percent and 24 percent.
It wasn’t alone in raising prices on non-compliant policies. Anthem Blue Cross in Maine plans to raise premiums by an average of 12 percent on its no-longer-cancelled policies. The Blue Cross provider in neighboring New Hampshire expects an average 7 percent increase. Blue Cross Blue Shield of Illinois said it would seek undefined price changes.
Raleigh attorney Jeff Poley, 42, says he’s fine with paying more for his current policy, considering what it would have cost him to switch to a new one. He’s covered himself with a high-deductible health policy from Blue Cross for the past two years, which currently costs $137 a month. The plan doesn’t cover maternity and some other benefits required under the Affordable Care Act.
When he initially received a cancellation notice, Blue Cross said the closest plan that met all of the new federal requirements would cost nearly twice as much.
But after Obama’s announcement, Blue Cross offered to extend Poley’s old plan for another year at $170 a month. His wife is covered by a policy through her law firm.
“I was glad for the one-year reprieve, but I would still like a permanent fix because I don’t need abortion coverage, I don’t need maternity coverage,” said Poley, who said he exercises vigorously about six days a week. “We as a family had made that choice and we are two intelligent people who know better what’s good for our family than the government does.”
About 15 million Americans buy policies as individuals, according to Families USA, a nonprofit organization that backs health reform. At least 4.2 million people received notices from their insurers that their policies would be cancelled, according to a tally by The Associated Press. The number is likely much higher because officials in 20 states said they were unable to provide information on cancellation notices.
Sabrina Corlette, project director at the Health Policy Institute at Georgetown University, warns that Obama’s decision last month could allow younger people with relatively few health problems to stay on bare-bones policies. That could lead to higher premiums in 2015 to offset the cost of covering people with more health problems, she said.
Still, even before Obama’s announcement last month, a pathway existed for many consumers to hang onto policies that didn’t conform to the ACA requirements.
About four out of five states allowed insurers to offer early renewals to non-conforming policies that would have expired sometime next year, according to America’s Health Insurance Plans, the industry trade association.
Virginia, Maryland, Arizona and Nebraska regulators said they won’t allow companies to resurrect cancelled plans as Obama suggested because the same could be accomplished if policy holders took advantage of early renewals before the end of this year.
Early renewals are allowing 60-year-old artist Marlys Dietrick of San Antonio and her 21-year-old son to stay in their old policies.
Dietrick jumped at the chance when Humana offered in October to renew her expiring, high-deductible policy early for $315 a month — an increase of about $15. She and her son both must spend $7,000 per year on medical bills to meet a deductible before the company starts paying.
Her insurer told her it would charge $705 a month for a similar policy that met the new standard required under the health care law. She earns too much to qualify for tax subsidies.
“I’m not saying I loved my insurance. I’m just saying I was able to keep the costs down by being able to tailor it to me and my needs,” she said. “I’m 60. I don’t need maternity. I don’t need pediatric. I’m healthy, I don’t need drug coverage. I don’t need mental health. There’s like five things that allowed me to keep my costs down. I was able to pick and choose.”
Consumers Union health care reform analyst Lynn Quincy said staying with an existing policy is a natural starting point. But renewing an existing policy with a high deductible or excluding types of coverage needed later may not turn out to be the best deal, she said.
“If your old coverage continued, that’s fine. But look at your other options before enrolling, because you can’t be turned down now” for pre-existing health conditions, Quincy said.