“The Obamacare Bait And Switch”: America’s Beloved Health Insurance Industry Demonstrates Why We Needed Reform All Along
So here’s my advice: If you’re somebody who’s smoking hot about the Big Lie of the Affordable Care Act — you know, how President Obama told everybody that if they liked their current health insurance policy they could keep it — do yourself a favor. Avoid the county fair midway.
Because if you go, you’re apt to encounter a quick-handed scoundrel running a shell game, and that boy will take your money. Doubtless Obama should have said almost everybody could keep their current plan, or that 95 percent could, but he apparently found that too, um, subtle for the campaign trail.
So now old Mitt “47-percent” Romney gets to call him a liar.
But while your attention’s fixed on the president’s “mendacity,” and “paternalism,” to quote one characteristically overwrought scribe, America’s beloved health insurance industry is demonstrating exactly why we needed reform all along. Certain companies are taking advantage of the political confusion to sell people in the “individual market” far more expensive plans than they need and blame “Obamacare.”
As usual, the nation’s esteemed political media have gone along for the ride. CBS News, rapidly morphing into Fox News Lite, presented the heartbreaking tale of one Diane Barrette, a 56 year-old Floridian who got a letter from her insurance company cancelling her $54 a month policy and offering a replacement for $591 a month—a lot of money to her.
CBS correspondent Jan Crawford, deemed smart enough to cover the U.S. Supreme Court, took Barrette’s story at face value. The idea that health insurance worth having could be purchased at a monthly cost of less than a steak dinner apparently failed to arouse her reporter’s curiosity.
Poor Barrette choked up telling CBS her story, leading to several appearances on Fox News itself.
Had CBS done elementary due diligence, they’d have learned why Ms. Barrette’s plan was so cheap. Reporters who did learned that among other shortcomings, it didn’t cover hospitalization. In reality, she had no health insurance at all. A serious accident or illness might have bankrupted her—precisely the kind of ripoff the Affordable Care Act makes illegal.
Also, Barrette was taking the insurance company’s word about the cost of a replacement policy. Writing for BillMoyers.com, Joshua Holland ran her numbers through Kaiser Permanente’s subsidy calculator. With assistance from Obamacare, she can have a real policy covering preventive care and hospitalization for an out-of-pocket cost of $97 monthly, or a more generous “Silver” level plan for $209.
Now she calls it “a blessing in disguise.”
In short, CBS News couldn’t have gotten the story more backward had they tried. For its part, NBC News featured Los Angeles real estate agent Deborah Cavallaro, whose similar experience led her to conclude that “there’s nothing affordable about the Affordable Care Act.”
However, LA Times columnist Michael Hiltzik found that Cavallaro had simply failed to consult Covered California, the state’s health plan exchange. When he did so, he quickly found that “better plans than she has now are available for her to purchase today, some of them for less money.”
No doubt some among the three to five percent of Americans whose individual health care policies have been cancelled are experiencing genuine sticker shock. However, nobody should take his insurance company’s word at face value without double-checking—a task admittedly made harder by Healthcare.gov’s website meltdown.
See, when you read a story about a couple like Dean and Mary Lou Griffin of Chadd’s Ford, PA, who told the Associated Press they’d expected to be able to keep the policy they bought three years ago, what reporters aren’t asking is where they’d gotten that idea.
From President Obama? Possibly.
More likely, however, from an insurance broker. See, all providers have known about new coverage standards ever since the Affordable Care Act passed in March 2010. Since then some have clearly been “churning” the market, offering low-risk, healthy customers bargain policies they knew perfectly well would no longer pass muster come January 1, 2014.
So now come the inevitable cancellation letters, and guess what? If they were lucky—and health-wise the Griffins have been fortunate—here comes the bad news. “We’re buying insurance that we will never use and can’t possibly ever benefit from,” Dean Griffin complains. “We’re basically passing on a benefit to other people who are not otherwise able to buy basic insurance.”
Two thoughts: One, don’t get cocky, you never know.
Two, boo-hoo-hoo. You can afford it.
Meanwhile, Dylan Scott at Talking Points Memo has documented companies sending “misleading letters to consumers, trying to lock them into…more expensive health insurance plans rather than let them shop for insurance and tax credits on the Obamacare marketplaces.” Authorities in four states have disciplined Humana affiliates for exactly that.
It’s a classic bait and switch: luring customers with unsustainably low rates, and then blaming the White House for their chicanery.
That’s basically why we needed Obamacare to begin with.
By: Gene Lyons, The National Memo, November 6, 2013
“The Last People We Should Take At Their Word”: In Shocking Development, Health Insurance Companies Still Suck
The Affordable Care Act was designed to solve the big problem of health security—namely that nobody in America had it—and find a way to get coverage for the 50 million Americans who were uninsured. It also attempted to address lots of other problems, and this week it’s a good time to remind ourselves that many of its provisions came about because, to put it bluntly, health-insurance companies are despicable scum who will literally kill people (more on this below) if it makes them more money. I bring this up because now, people in the news media are learning about a scam insurance companies are trying to pull on some of their customers, and are not only not portraying it as such, but are simply taking the insurance companies’ word and blaming the whole thing on the Obama administration.
I realize that part about “despicable scum” is a little intemperate, and without question there are employees of the insurers who are good people. But as a whole, outside of the tobacco companies or gun manufacturers it’s hard to find an industry that so frequently destroys people’s lives when they’re at their most vulnerable and fools so many people into thinking they’re safe when they aren’t. Because of the shocking behavior insurance companies are capable of, the ACA had a number of provisions meant to rein in the companies from their most horrific abuses. It made lifetime caps on coverage illegal, meaning that people with the worst illnesses and accidents won’t go bankrupt because their insurance companies abandon them. It outlawed denials for pre-existing conditions. It banned “rescission”—remember that one? That’s when you get the worst news of your life, for instance that you have cancer, and the insurance company swings into action. They start poring over every document you’ve ever signed to see if they can come up with a reason to kick you off your coverage and avoid paying for that expensive treatment. Like the woman who got a cancer diagnosis and was scheduled for a double mastectomy, then got booted from her policy because her insurance company’s diligent efforts unearthed that she had forgotten to tell them she had once been treated for acne, which allowed them to claim that her original application for insurance was fraudulent and therefore they could rescind her whole policy.
That’s what I mean when I talk about them literally killing people. If someone has a life-threatening illness and will die without treatment, and then the insurance company to which they’ve been dutifully paying premiums decides to say “screw you” and make it impossible for them to get treated, then that’s an accurate way to describe it.
And as you’ve heard, these very same companies are now sending letters to thousands of their customers, telling them that the policies they’re on (which in many cases are junk insurance that covers virtually nothing) are being cancelled, and they’ll now have to pay hundreds of dollars more every month. Those customers are naturally aghast. And reporters are running to find them and air stories about the horrible “rate shock” Obamacare is producing. What those reporters aren’t doing is asking what you’d think would be relevant questions, particularly since it’s health insurance companies we’re talking about. Questions like: Is this letter accurate? Is there something the insurance company isn’t telling this customer? Might they be trying to pull a fast one, to maximize their profits at this person’s expense?
Even though it was only last week, I think I was among the first to raise the possibility that these cancellation letters are a scam, and now it’s looking more and more like that is indeed the case. One after another of the people who have been featured on breathless news stories about insurance cancellations turns out to have much better options on the new health insurance exchanges, in many cases for better coverage at lower prices than they’re paying now. The letters appear to be an effort to lock customers into high-priced policies before they discover that they have other options available to them. But we aren’t finding out about that from the big media outlets, who just prefer to run the same credulous story over and over about the 60-year-old Florida woman with a $54 a month joke of an insurance plan whose insurance company is trying to sell her a plan for many times as much.
This whole thing should serve as a reminder that while the ACA tried to create a regulatory framework that would curb the worst abuses of the insurance industry, the whole thing was also engineered to maintain the position and profits of that very industry. And if you think they suddenly decided to value their customers’ physical and financial health over their own profits, you’ve got another thing coming.
While we’re on the topic, Brian Beutler gives us something else to think about:
Let this be a reminder to the Democrats on Capitol Hill and in the White House who killed the public option. It could’ve been designed as a default plan for cancelees. And its very existence would have imposed discipline on the system — if everyone knew they can enroll in a plan modeled on Medicare, insurers would be less inclined to swindle their customers. Ironically, but predictably, the Democrats who will face the greatest political consequences of the turbulent final throes of the old individual market are in many cases the ones responsible for leaving it in the hands of for-profit insurers. But there’s plenty of blame to go around here, including to reporters treating missives from health insurance companies as reliable testimony.
You’ll remember the absolute horror with which Republicans greeted the possibility of a public option being included in the law. They were terrified that if Americans were allowed to choose to enter a Medicare-like program, lots of them would do it, and the insurance companies would lose customers. This was a perfectly legitimate fear; if Medicare is any indication, a public option would have likely been less expensive than private insurance and produced happy customers, and every person who chose to get their insurance from it would represent a rejection of conservative ideology. President Obama claimed he favored the inclusion of a public option, but never displayed any enthusiasm for it and seemed eager to drop it as one of the many failed gestures intended to win the Republican support that never materialized.
That may be a topic to revisit on another day. But if there’s any rule that reporters should follow when reporting on the rollout of the ACA, it’s this: Don’t take insurance companies at their word. They’ve already shown us who they are, and there’s no reason to think they’ve changed.
By: Paul Waldman, Contributing Editor, The American Prospect, November 5, 2013
“A Range Of Options And A Very Good Deal”: Under The Affordable Care Act, Millions Eligible For Free Policies
Millions of people could qualify for federal subsidies that will pay the entire monthly cost of some health care plans being offered in the online marketplaces set up under President Obama’s health care law, a surprising figure that has not garnered much attention, in part because the zero-premium plans come with serious trade-offs.
Three independent estimates by Wall Street analysts and a consulting firm say up to seven million people could qualify for the plans, but federal officials and insurers are reluctant to push them too hard because they are concerned about encouraging people to sign up for something that might ultimately not fit their needs.
The bulk of these plans are so-called bronze policies, the least expensive available. They require people to pay the most in out-of-pocket costs, for doctor visits and other benefits like hospital stays.
Supporters of the Affordable Care Act say that the availability of free-premium plans — as well as inexpensive policies that cover more — shows that it is achieving its goal of making health insurance widely available. A large number of those who qualify have incomes that fall just above the threshold for Medicaid, the government program for the poor, according to an analysis by the consulting firm McKinsey and Company.
The latest analysis was conducted by McKinsey’s Center for U.S. Health System Reform, whose independent research has been cited by the federal government and others.
“The whole point of the law was not only to cover the uninsured, but so people didn’t have to make choices between food or drugs, or going to the doctor or dentist,” said Karen Davis, a health policy expert at the Johns Hopkins Bloomberg School of Public Health. “It’s what it is designed to do.”
Many insurers tried to price their least expensive plans so they would become free or nearly free with the addition of subsidies that are set based on a person’s income and the cost of a midlevel, or silver, plan.
Independence Blue Cross in Philadelphia has four plans that are free to some customers. But the company, along with other insurers, has been careful not to publicize its free coverage for fear of alienating customers who will need to pay more.
“We’re not advertising zero dollar,” said Brian Lobley, a senior vice president at Independence Blue Cross. But the company is promoting monthly premiums in the $20 to $30 range, he said.
The Obama administration has also stressed affordability over coverage with no monthly charge, frequently saying that the cost of coverage will be less than a monthly cellphone bill for many consumers. Officials at the Department of Health and Human Services would not comment on the McKinsey analysis, saying in a statement that the goal of the health law was to provide a range of options for people with differing needs and budgets.
The analysis found that five million to six million people who are uninsured will qualify for subsidies that will be greater than the cost of the cheapest bronze or silver plan. A million more people with individual insurance could also be eligible, according to McKinsey, although estimates of the size of the market for private individual insurance vary widely. None of the people in the analysis qualify for Medicaid.
The availability of zero-premium plans may make the deal especially enticing to the healthy young people the marketplace needs to succeed, said Mark V. Pauly, a professor of health care management at the University of Pennsylvania’s Wharton School. “This is such a good deal that you’d have to believe you were immortal not to really pick it up,” he said.
Although they vary in their design, bronze plans generally cover about 60 percent of a person’s medical costs. All plans, including bronze, must cover standard benefits like prescription drugs, maternity care and mental health treatment.
The availability of the zero-premium plans varies across the country. McKinsey found that about 40 percent of the uninsured in Missouri will be able to select a no-cost bronze plan, for example, compared with 2 percent of the uninsured in New Jersey.
Its estimate, based on an analysis of premiums for plans offered in the marketplaces in all 50 states and the District of Columbia, is in line with two other estimates, by Credit Suisse and Morgan Stanley.
The McKinsey researchers also found that about half of the people eligible for zero-premium plans were under 39 and uninsured. The Obama administration has been emphasizing the affordability of its plans for young people, a critical group because their participation in the marketplaces will help keep overall premiums low.
It is impossible to know who will actually sign up, and whether they will choose a zero-premium plan.
For many people, paying slightly more for a silver plan may be a much better option, experts said. Ninety percent of those who will have the option of buying the no-cost plans make less than 250 percent of the federal poverty level, which is $28,725 for an individual, and $58,875 for a family of four. People earning below those thresholds are eligible for the most generous assistance, but only if they choose a silver plan.
About a million of those who will qualify for free coverage will be able to buy a silver plan for no monthly cost. McKinsey, which is releasing a report about the new insurance marketplaces, estimates that the cost of silver plans for the people who qualify for a zero-premium bronze plan will range from $40 to $50 a month.
“They may be getting zero premiums, but they’re also leaving a lot of money on the table if they don’t enroll in a silver-level plan,” said Sabrina Corlette, a professor at Georgetown University’s Health Policy Institute.
All plans, including bronze policies, limit annual out-of-pocket costs to $6,350 for individuals and $12,700 for families. But insurers and advocates said out-of-pocket costs — even those under that limit — can be daunting to people with low incomes.
For Mark and Elisabeth Horst, both artists in Albuquerque, the risks of signing up for a bronze plan were outweighed by the prospect of getting it free. The Horsts, who make $24,000 a year between them, qualified for $612 in monthly subsidies, but the cost of a bronze plan was $581 a month.
“We’re in good health,” Mr. Horst said.
Besides, he said, they can always switch to a better plan next year. “At this point, it’s a little bit of a gamble.”
Not everyone selects the cheapest option. Dante Olivia Smith, a lighting designer from Manhattan, learned that federal subsidies would allow her to buy a bronze plan for $24 a month.
“It was astounding,” she said. “I almost started crying, and called my mom.”
In the end, however, she went with a silver plan for $91 a month that included dental and vision coverage. Ms. Smith, who is 30, said she opted for the more comprehensive plan because of her work, which requires her to climb ladders and use power tools.
“If I had a different job, for 24 dollars a month I would have been like ‘Woo-hoo!’ ” she said. “But the reality is, I know what my risks are in my life.”
By: Reed Abelson and Katie Thomas, The New York Times, November 3, 2013
“What Congress Didn’t Say”: Obamacare Outlaws Policies That Are Essentially Worthless
As I watched Health and Human Services Secretary Kathleen Sebelius being grilled by members of the House Energy and Commerce Committee last week, it was immediately clear to me just how many of them are in the pockets of the industry I used to work for.
Former colleagues of mine undoubtedly had a hand in writing the members’ comments and questions. Their behavior showed just how much more willing they are to protect the profits of health insurers than protect the health and financial well- being of their constituents.
I got the same treatment from many of those committee members when I provided testimony in March — or tried to. I had been invited to talk about the business practices of insurers — practices that have contributed to the rising number of uninsured and underinsured Americans. Among them: refusing to sell policies to millions of us because of preexisting conditions and charging exorbitant premiums for skimpy coverage to others.
When I tried to tell the tale of a Florida woman who died of cancer last year because she was priced out of the market and was unable to buy coverage at any price, Rep. Marsha Blackburn, a Republican from my home state of Tennessee, cut me off. She clearly had no interest in hearing about Leslie Elder or anything else I had to say. Instead, Blackburn held forth for more than five minutes and gave me all of 20 seconds to respond.
Throughout that hearing, a former co-worker from my Humana days, who later worked for the industry’s big lobbying group and then the Bush administration, stood a few feet behind Blackburn. That former co-worker now serves as senior policy adviser to the committee. So I was not the least bit surprised that Blackburn was determined to give me as little time to talk as possible.
During the Sebelius hearing, Blackburn and other GOP members talked about letters constituents have received informing them that their policies will not be available next year. How could that be, they asked, when the president assured us four years ago that, “If you like your health care plan, you can keep your health care plan.” Blackburn, et al accused the president of being dishonest.
Obama should not have used those exact words. That’s because one reason for the Affordable Care Act in the first place was to protect us from insurers all too willing to lure us into inadequate policies with slick marketing materials. Insurers have made billions in profits from selling such junk insurance, and people like Blackburn clearly want to get rid of the law that makes junk insurance illegal.
As I wrote in Deadly Spin, a years-long industry strategy has been to shift more and more medical expenses to patients. As part of that strategy, big insurance firms bought smaller companies that specialize in limited-benefit plans, which often provide such skimpy coverage that some insurance brokers have refused to sell them.
Cigna, for example, marketed a limited-benefit plan to narrowly targeted prospective customers: mid-sized employers with high employee turnover, such as chain restaurants. The underwriting criteria was specific. The average age of an employer’s workers couldn’t be higher than 40 and no more than 65 percent of the workers could be female. (Insurers have long charged women more than men because in their eyes being born female is a pre-existing condition.) In addition, employers had to have a 70 percent or higher annual employee-turnover rate, meaning that most employees wouldn’t stay on the job long enough to use their benefits. Employees also could not get coverage for care related to any pre-existing condition during their first six months of enrollment.
Limited-benefit plans like that one, blessedly, will not be available next year, and that’s because of the Affordable Care Act. Neither will plans with sky-high deductibles. Another way insurers have shifted costs to patients in order to enhance profits: luring or forcing them into plans with such high deductibles they join the ranks of the underinsured the moment they enroll. When people in these plans get seriously sick or injured, they are on the hook for thousands of dollars in medical bills they’ll have to pay out of their own pockets.
Millions of Americans — including my son, Alex — got letters from their insurers in the years before the ACA was enacted informing them that their plans were being discontinued. Why? To fulfill the industry strategy of moving people out of plans with affordable co-payments and co-insurance obligations and into high-deductible or limited-benefit plans. Such plans are far more profitable.
Keep this in mind the next time you hear a politician railing against Obamacare because people are getting letters from their insurers. The truth these politicians want to obscure is that Obamacare is protecting their constituents from buying coverage that provides little to no shield against financial ruin. And that protection is something the insurance industry wants to get rid of.
By: Wendell Potter, The Center for Public Integrity, November 4, 2013
“More Than Just A Message”: The Origins Of “If You Like Your Health Insurance, You Can Keep It”
There are good reasons why President Obama’s leading message on health care during the 2008 campaign, often repeated since, was “if you like your health insurance, you can keep it.” That message was created to overcome the fear-mongering that had blocked legislative efforts to make health care a government-guaranteed right in the United States for a century.
Our health is of central importance to our lives, deeply personal to our well-being and that of our loved ones. That concern has translated politically; for decades, people have told pollsters that health care is a top concern. It is why every 15 to 20 years – from 1912 to 2008 – the nation has returned to a discussion about whether and how the government should guarantee health coverage, the debate rising phoenix-like from one spectacular defeat after another. A big reason for those defeats has been that opponents have exploited those deep feelings to scare the public about proposed reforms.
As one of the people who engaged early on in building the effort that led to the passage of the Affordable Care Act, I am keenly aware of this history. I wrote in 2003 that debates over health care turn dramatically when they move from the problem to the solution. Almost everyone agrees there’s a problem, but when a solution is proposed, people’s first question will be, “how will it impact me?”
The extensive public opinion research we conducted from 2006 to 2008 emphasized that same point: people would look closely at how any proposed reforms impacted their lives. Yes, Americans are worried about high health care costs and alarmed at the prospect of losing coverage. Yes, they may be unhappy with the quality and security of the coverage they have. But at the same time, they are desperate to hold on to it, because at least it’s something.
We also knew that those who wanted to block health care reform would play on people’s fears, a lesson learned most recently in the 1993-1994 fight over the Clinton health plan, in which opponents made wild claims about government bureaucrats coming between you and your doctor and denying you coverage.
In that context, it was essential to assure the 85 percent of Americans with health coverage that reform would not be a threat. Hence, “If you like your health care, you can keep it.” That message reassured people and let them be open to the rest of the message: proposed reforms would guarantee quality, affordable coverage to everyone and fix the real problems people were facing. After all, the first part of that sentence, “if you like it,” implies that lots of people would love to improve their coverage by making it more affordable and secure and by ending insurance company abuses.
Hillary Clinton’s campaign understood this early on, and she used the message consistently when she talked about health care reform during the Democratic primaries. Soon after she dropped out, Obama made it a key part of his health care message. But the promise that you could keep your health care was more than just a message; for almost everyone, it was an accurate description of the almost identical reform policies proposed by Clinton and Obama, which became the foundation for the Affordable Care Act.
The ACA preserves (with small but important improvements) the current system of health care financing for the vast majority of Americans: employer-based coverage, Medicare, and Medicaid. Those are the 94 percent of people with coverage for whom the “if you like it, you can keep it” promise is true.
For the 6 percent of insured who buy coverage on their own, the more accurate message would have been, “If you have good insurance and you like it, you can keep it.” The ACA reforms a corrupt individual insurance market. No longer can insurers turn people down due to a pre-existing condition or raise rates and drop people because they get sick. The ACA bans the sale of plans with such skimpy benefits and high-out-of-pockets costs that they are worthless if someone gets seriously ill.
As we predicted, the opponents of reform used fear-mongering – death panels, government takeover of health care, and on and on – to try to kill the Affordable Care Act. They are still at it, including cynically jumping on the website’s enrollment problems and now insurance companies sending letters to customers which hide the fact that companies are being forced for the first time to sell a good, reliable product.
The opponents of reform have used reckless, baseless charges to try to kill reform. I’m glad that President Obama used a slight exaggeration to finally provide secure health coverage for all Americans.
By: Richard Kirsch, The National Memo, November 4, 2013
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