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Insurance Companies Cancel Thousands of Policies

So much for keeping your own insurance policy. Despite President Obama’s promise in 2009, “If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.” Unfortunately, no matter how much you want something to be true- sometimes it’s simply a lie. According to Kaiser Health News, as reported by WebMD, insurance companies are now confirming they have sent “hundreds of thousands of cancellation letters to people who buy their own coverage, frustrating some consumers who want to keep what they have and forcing others to buy more costly policies.”

What’s the reason? According to Kaiser it’s because many of the policies do not offer the level of care which is required under the Affordable Care Act which is set to start on January 1, 2014.

Is this a reason for concern?

Millions of people are happy with their insurance companies, and despite the updated changes, they may not feel they need to buy a new policy. But proponents of Obama’s new health care coverage argue that change may be good. For instance, policies which are now sold in the individual markets will have to cover “essential” benefits, such as prescription drugs, mental health treatment and maternity care. Opponents counter that many young and healthy individuals have no need for these “extras” and would rather have lower insurance rates.

Who may benefit from the changes? Consumers with preexisting conditions who had not been able to buy insurance because insurance companies historically rejected people with preexisting medical problems or charged them higher prices. The policies must also cap consumers’ annual expenses at levels lower than many plans sold before the new rules.

How widespread is the problem with insurance companies?

According to reports, Florida Blue and Kaiser Permanente in California have cancelled 300,000 and 160,000 insurance policies, respectively, while Insurer Highmark in Pittsburgh is dropping about 20 percent of its individual market customers. All of these cancellations have shocked customers who listened closely to President Obama when he said they could keep their plans.

What do insurance companies think?

Interestingly, many of the policy cancellations have gone out to customers who had preexisting medical conditions when they signed up. This leads many consumer advocates to believe that insurance companies may be attempting to target and eliminate their most costly insurance customers.

The argument is that insurance companies may be trying to “purge” their insurance rolls of the most expensive policy holders in an effort to “push their populations into the exchange.” Insurance companies vehemently deny this is the case, arguing that they are trying to offer different insurance options for their customers.

Bottom Line

Offering minimum benefits and not allowing consumers to be denied coverage will be more expensive, particularly for younger and healthier people who have traditionally had access to relatively inexpensive plans with minimal benefits and high deductibles.

What no one wants to talk about is that mandating a minimum set of benefits that go beyond what skimpy plans sold to younger and healthier people will leave some customers exposed to high health care costs or even financial ruin.
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