Daily Kos: Your health plan changing? Employers, insurers largely to blame

Just days before President Obama signed the Affordable Care Act into law the following March, a study by the of 507 companies with over 1,000 employees found that:

Many say they may charge more to cover spouses, tighten eligibility standards for their health plans and dispense financial rewards or penalties based on the results of certain lab tests. At some companies, overweight employees could be excluded from the most desirable plans. Meanwhile, employees at many companies can expect significantly higher premiums, deductibles and co-payments.

Again, this was prior to the passage of Obamacare and specifically its employer mandate whose implementation has been pushed back to 2015. As Kaiser’s latest employer survey showed, between 2006 and 2013, the percentage of workers who employer-based plans required a deductible jumped by half from 52 to 78 percent. During that same time frame, the share of workers whose deductible topped $ 1,000 a year almost quadrupled from 10 to 38 percent. Nevertheless, CNN Money last month asked, “Are employers dumping health benefits because of Obamacare?” CNN cited anecdotal examples of organizations like Trader Joe’s and Romney-aligned Home Depot shifting part-time workers to the ACA exchanges and others like the University of Virginia and UPS which announced plans to end benefits for spouses with coverage options elsewhere. But as the Wall Street Journal and others have documented, part-time employment is falling as businesses add more full-time positions. And as the CNN article also noted, “Obamacare is not the only reason behind the benefits adjustments.”

“An increase in costs of a few percent isn’t enough to cause widespread changes in benefits,” said Larry Levitt, senior vice president at the Kaiser Family Foundation. Other factors, such as the improving economy, are contributing to rising costs since people use more medical care when the economy is healthier.

Also, companies have been shifting costs to employees for years. While UPS will limit its spousal coverage, it is not the first company to do so.

That is, to put it mildly, an understatement. On the other hand, the term “understatement” certainly can’t be used to describe the headlines about the several hundred thousand Americans whose premiums are being increased or policies cancelled for 2014. While McClatchy recently warned that “for thousands, keeping your old health insurance policy isn’t an option,” the San Diego Union Tribune reported “thousands told health policies will end.” Kaiser Health News explained why some of the 14 million people who directly purchase health insurance for themselves or their families (a total of roughly 30 million people and 9.8 percent of the population) are getting cancellation letters or massive price increase notifications in the mail:

The main reason insurers offer is that the policies fall short of what the Affordable Care Act requires starting Jan. 1. Most are ending policies sold after the law passed in March 2010. At least a few are cancelling plans sold to people with pre-existing medical conditions. By all accounts, the new policies will offer consumers better coverage, in some cases, for comparable cost — especially after the inclusion of federal subsidies for those who qualify. The law requires policies sold in the individual market to cover 10 “essential” benefits, such as prescription drugs, mental health treatment and maternity care. In addition, insurers cannot reject people with medical problems or charge them higher prices. The policies must also cap consumers’ annual expenses at levels lower than many plans sold before the new rules.

But while Obamacare’s new protections are one factor behind the repricing or elimination of some customers’ existing policies, there are others. The ACA’s prohibition on discriminating against those with pre-existing conditions is allowing some insurers to drop “guaranteed issue” options from their product line. But as Kaiser also explained, some are doubtless taking advantage of the opportunity to purge their costliest policy holders: Consumer advocates say such cancellations raise concerns that companies may be targeting their most costly enrollees. They may be “doing this as an opportunity to push their populations into the exchange and purge their systems” of policyholders they no longer want, said Jerry Flanagan, an attorney with the advocacy group Consumer Watchdog in California.

Even with those “10 essential benefits” and the ACA’s new limits on insurers’ “non-medical expenses,” roughly half of Americans purchasing in coverage in the individual market should still realize savings. Another Kaiser analysis showed that 48 percent of those shopping in the exchanges will qualify for federal subsidies averaging $ 2,672 a year. Meanwhile, insurers can maintain “grandfathered” policies sold before 2010, though these must be purchased by existing policy holders outside of the subsidized exchanges. As Josn Barro pointed out: Plans that existed before March 2010 are exempt from some of the requirements under the ACA. For example, they do not have to offer free preventive care and they can impose annual limits on benefits. For these reasons, grandfathered plans may be cheaper than new plans, and participants currently on them may want to stay on them. They’ll have to buy outside the exchanges to do so. Unless, that is, their insurers refuse to offer them. Addressing a joint session of Congress in September 2009, President Obama emphasized that under his health care reform proposal, the federal government would not require Americans to change either their insurance or their doctors:

“If you are among the hundreds of millions of Americans who already have health insurance through your job, Medicare, Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: nothing in our plan requires you to change what you have.” That’s right. Nothing in Obamacare requires you to change what you have. Sadly, your employer or insurer might. But that’s nothing really new under the Affordable Care Act. They’ve been doing that for years.

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