A Simple Plan

This Friday, House Republicans will launch their latest attack against the Affordable Care Act when they hold a vote on the Keep Your Health Act.  The bill would allow a small sect of Americans to keep their insurance plans that were cancelled under the ACA.

If recent history has taught us anything, trusting House Republicans to work in the best interest of the American people is like trusting Lando Calrissian to keep you safe from the Empire.

Lando Keeping Han safe

“If you like your doctor, you’re going to be able to keep your doctor.  If you like your plan, keep your plan,” President Obama said in 2010 (and many variations of since).  The President’s broad claim held true for 94% of the country’s population.  So, what happened with the other 6%?

Insurance plans now have to cover ten essentials under the Affordable Care Act (aka “Obamacare”), including: prescription drugs, hospitalization, laboratory services and emergency care.

President Obama signs ACA into law

Plans existing before March 23, 2010 were grandfathered in and would remain viable even if the above requirements were not covered and the companies did not make major changes to those policies.  For example, if the healthcare insurer changed the amount of a co-payment, the plan would no longer qualify for grandfathered status.

Insurance plans also now have to cover at least 60% of medical services (the “bronze” plan under the ACA).   A study published last year in the healthcare journal, Health Affairs, showed that half of people in the individual market had “tin” plans (Jesus, it even sounds shitty) that covered less than 60% of healthcare costs.  The simple reality is that before the ACA, these plans would likely not have prevented financial ruin to the policyholders due to a serious medical illness or procedure, and placed the burden on the insured.   However, that hasn’t stopped people from speaking in favor for higher costs and less coverage.

Allison Denijs was one of six individuals who appeared on Sean Hannity’s Fox News show, discussing her sudden coverage cancellation due to the Affordable Care Act.  Mrs. Denijs was paying more than $13,000 in premiums for a plan that did not even cover both of her children, due to one of them having a pre-existing condition.  If she had included both children, it would have raised her costs to $20,000.

Hannity

In an excellent follow-up piece for Salon.com, writer Eric Stern discovered that Mrs. Denijs and her husband had not even checked the prices on the ACA exchange marketplace before appearing on Hannity’s show.  Using the Kaiser calculator, Stern found a plan that would cover Denij’s entire family of four for $7,600.

In a similar piece for the Los Angeles Times, Michael Hilzik discussed the case of Deborah Cavallaro.  She has appeared on CNBC and other news outlets denouncing the Affordable Care Act while discussing how the law has terminated her current plan.

Speaking with Hilzik, Cavallaro shared the details of her current Anthem Blue Cross catastrophic coverage (similar to a bronze plan on the ACA exchange).  Hilzik writes: “she pays $293 a month as an individual policyholder.  It requires her to pay a deductible of $5,000 a year and limits her out-of-pocket costs to $8,500 a year.  Her plan also limits her to two doctor visits a year, for which she shoulders a co-pay of $40 each.  After that, she pays the whole cost of subsequent visits.”

Deborah Cavallaro

Using the ACA exchange, Hilzik found a silver plan for Cavallaro at $333 a month.  The deductible is $2000.  The out of pocket costs is $6,350 (the maximum total out of pocket cost allowed in the ACA marketplace for 2014).  All doctor visits are covered and the co-pay is $45.

Hilzik also found a bronze plan offered by Cavallaro’s current healthcare insurer for $256. The policy features the same $5,000 deductable she is currently paying and out-of-pocket costs of $6,350.

Like Denijs, Cavallaro never checked the exchange before making her media appearances.

As pointed out by economist Jonathan Gruber (who worked on both the Romney and Obama healthcare plans), half of Americans receiving cancellation notices will be able to find plans similar to their current policies that meet all the ACA requirements in the marketplace.  That leaves only 3% of Americans on the individual market who will end up paying a higher premium under the ACA.

Jonathan Gruber

If you’re still reaching for that bottle of Chardonnay to celebrate the Republican answer to affordable healthcare, the Keep Your Health Act has its own drawbacks.

It only protects plans that were offered in the individual market since January 1, 2013, not March 23, 2010.

The Act also can’t guarantee the reinstatement of all terminated policies; that decision would ultimately be made by the insurance companies.  Some providers such as UnitedHealth Group have pulled their services from specific state individual markets altogether prior to the exchanges opening, fearing they would not be able to compete with the lower costs.  UnitedHealth has also anticipated the first few waves of people to enroll in the exchanges to have “a pent-up appetite” for medical services, meaning they don’t want to have to cover the really sick people.

Under the Affordable Care Act, Allison Denijs’ daughter can be included under a financially feasible plan for the entire family.  Under the Republican plan, the healthcare costs for Mrs. Denijs’ child would ultimately fall on the insured (if she chose to stay with her current terrible policy).

In addition to increasing premiums, the Keep Your Health Act would allow substandard policies to continue to deny coverage to those with pre-existing conditions and increase rates on patients who get sick.  The Affordable Care Act has eliminated both of these practices.

President Obama did make a mistake in stating that everyone could keep their policy under the Affordable Care Act. However, I think this promise is one that’s worthy of breaking.

UPDATE:

Since my initial publishing of the above entry, President Obama has offered to extend cancelled policies that do not meet the requirements of the ACA for one year.

The President’s extension also requires that insurance companies explain to their enrollees why the plans are insufficient under the ACA and what other alternatives are available.  The decision to accept the extension offered by the administration will be up to the state insurance commissioners.

“I do not believe his proposal is a good deal for the state of Washington,” Washington state Insurance Commissioner Mike Kreidler quickly responded in a statement.  “In the interest of keeping the consumer protections, we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course.  We will not be allowing insurance companies to extend their policies.  I believe this is in the best interest of the health insurance market in Washington.”

It is refreshing to hear a voice of reason among the panicked, ill thought out responses making the rounds in not only our media but in our legislation.

The Republican plan is simply another attempt to undermine the ACA.  President Obama’s extension is damage control, while the newly proposed Democratic plan (everyone has one apparently) is clearly ass coverage for the looming 2014 elections.

Louisiana Democratic Senator Mary Landrieu’s Keeping the Affordable Care Act Promise Act also requires insurers of canceled policies to send an annual letter to their enrollees explaining why their plan does not meet the ACA requirements.  Unlike the President’s extension, enrollees could keep their grandfathered policies indefinitely.  Bad call, Ripley.

Four of the Act’s six co-sponsors (including Landrieu), Jeff Merkley (D-Ore.), Mark Pryor (D-Ark.) and Kay Hagan (D-N.C.) will be seeking re-election next year.

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