Clarifying those insurance cancellation notices

healthcare6.jpgNo one questions how scary it must be to be told that your health care plan is being cancelled - and that the replacement policy could be two or three times more expensive. But there's more to the story, according to the Washington Post's Sarah Kliff. First off, the cancellations only affect the people who buy individual policies - maybe 5 percent of the insurance market, and not even all of them. (This includes between 200,000 and 300,000 Californians.) Most of these people hold policies a short time as a kind of placeholder; one study found that only 17 percent purchased the same plan for two straight years or longer. More importantly, some of these plans offer extremely limited coverage - no maternity care, mental health benefits or even prescription drugs, for example. This, of course, was the whole idea behind the Affordable Care Act: Establishing minimal standards. Opponents would argue that the government should not be in the business of determining what coverage needs to be included - that policyholders must be empowered to make those decisions. That's a reasonable point - except that when one of these bare-bones plans doesn't cover a procedure or prescription or whatever, someone must still pay the bill - and it's doubtful the check will be coming from the policyholders. Why do you think they're taking these policies in the first place? And let's also not forget that paying higher premiums at the front end usually results in lower out-of-pocket expenses when something does go wrong. Point is, these calculations are nebulous, and we tend not to do nebulous very well. From Kliff:

How did nobody see this coming?

President Obama has repeatedly said, since the health law passed, that if people like their insurance they could keep it. Which is a weird promise to make when one of the key goals of the health-care law is to change individual market insurance coverage.

Who thought that was a good idea?

The drafters of the Affordable Care Act! The whole idea of the insurance expansion isn't to get Americans to purchase anything called "insurance." It's to get them to purchase a specific kind of insurance, a plan that is relatively comprehensive and helps protect against financial ruin. If Americans were going to be required to buy a product, the reasoning goes, it should be one that can actually do some good. Of course, not everyone agrees with this; some contend that shoppers should be able to continue buying less robust insurance policies and have the option of taking on more financial risk.


Will insurance cost more?

This will vary a lot from person to person. Some people who are buying a bare-bones plan right now will likely see higher premiums under Obamacare. They'd be getting more benefits -- but paying more in premiums. Some people will get financial help buying that more robust insurance; people who earn less than 400 percent of the federal poverty line (about $45,000 for an individual) can use a tax subsidy to purchase their plan.

suzanne.jpgBy the way, if you're looking for a good chuckle (or maybe a good cry), check out a WSJ oped by that world-renowned health care expert Suzanne Somers on the Affordable Care Act. At last check, the Journal has posted three corrections. Here's the best graf:

And then there is another consideration: It's the dark underbelly of the Affordable Care Act reminiscent of what Lenin and Churchill both said. Lenin: "Socialized medicine is the keystone to the arch of the socialist state." Churchill: "Control your citizens' health care and you control your citizens."

From the Atlantic Wire's Philip Bump:

Neither of those people said those things. Churchill wasn't a huge fan of Britain's health system in his later years, but he helped set it up. There's no record that he said anything about its being a tool for control. And that Lenin quote? Made up. Don't let any of this cast a pall over Somers' other fine health-related work; to wit, her endorsement of various thigh-enhancing products. On her website, her "ThighMaster Gold & ButtMaster" gets a robust five stars, so it sounds like something in which you can put your faith. Except that on Amazon, it averages two stars.

More by Mark Lacter:
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Those awful infographics that promise to explain and only distort
Best to low-ball today's employment report
Further fallout from airport shootings
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Should Twitter be valued at $18 billion?
Recent Health stories:
More deciphering of insurance cancellations
Clarifying those insurance cancellation notices
Uproar over health care sites could be settling down
Majority of Americans, Californians support legalizing pot
The drip-drip-drip of health care malfunction

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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