Last night on All In with Chris Hayes (Video is on their Site) there was an interview with Dylan Scott from Talking Points Memo who penned the article that shows how Insurance Companies have been Falsely Cancelling Cheap Policies in order to TRICK their customers into more expensive ones, and blaming the Affordable Care Act so that they won't go shopping on the Exchange Marketplace to get a better deal.
I wrote about this article yesterday and in the process of discussing it with various Kossacks came to a startling realization.
Everything we've been told about how the ACA puts heavy requirements on existing plans is wrong. It doesn't. The truth is that old plans already had to meet requirements that would have allowed them to continue under the ACA without any disruption. Even the Junk Plans.
These Insurance Companies haven't been Cancelling their old plans because they weren't "Obamacare Compliant". They already were compliant as Grandfathered Plans as long as they'd existed since 2010. As Dylan wrote these cancellations were part of a Insurance Scam to use the ACA as an excuse to shove people into higher rate plans before they had a chance to go shopping on the Exchange Marketplace and get a better deal.
That's ALL that's going on here. It's a Scam, not something the ACA forced them into and not something that the President "Lied" or "Misrepresented". The Insurance Companies Are Lying when they say their old policies don't meet ACA requirements. They already do.
I just email the following in a letter to Dylan Scott at TPM.
Dylan,
I saw and wrote about your TPM story on Falsely Cancelled Insurance Policies yesterday on DailyKos, and in the process of discussing it with various posters came to the realization that the common assumptions about "Junk Policies" that the Obama Administration should have known were going to be Cancelled is actually wrong.
Many people are assuming that as of 2014 there are many new requirements being placed on these old policies that would have made them more expensive and hence the Insurance Companies decided to Cancel them in favor of "ACA Compliant" plans, but that isn't true. As long as the plan has existed since March of 2010, then it is ALREADY ACA Compliant as a Grandfathered Plan.
All the requirements that Grandfathered Plans needed to meet, they already have. Here they are according to Healthcare.gov
https://www.healthcare.gov/...
All health plans must:
End lifetime limits on coverage
End arbitrary cancellations of health coverage
Cover adult children up to age 26
Provide a Summary of Benefits and Coverage (SBC), a short, easy-to-understand summary of what a plan covers and costs
Hold insurance companies accountable to spend your premiums on health care, not administrative costs and bonuses
Grandfathered plans DON'T have to:
Cover preventive care for free
Guarantee your right to appeal
Protect your choice of doctors and access to emergency care
Be held accountable through Rate Review for excessive premium increases
In addition to the above, grandfathered individual health insurance plans (the kind you buy yourself, not the kind you get from an employer) don't have to:
End yearly limits on coverage
Cover you if you have a pre-existing health condition
Note: Some grandfathered plans offer protections they're not required to. Check with your insurance company or benefits administrator to learn if your grandfathered plan offers the rights and protections listed above.
The first five items which apply to all plans including those eligible for Grandfathered Status are NOT new this year.
The Lifetime Coverage Limit has been gradually raised for the last several years, it's not "New".
The law restricts and phases out the annual dollar limits that all job-related plans, and individual health insurance plans issued after March 23, 2010, can put on most covered health benefits. Specifically, the law says that none of these plans can set an annual dollar limit lower than:
$750,000: for a plan year or policy year starting on or after September 23, 2010 but before September 23, 2011.
$1.25 million: for a plan year or policy year starting on or after September 23, 2011 but before September 23, 2012.
$2 million: for a plan year or policy year starting on or after September 23, 2012 but before January 1, 2014.
No annual dollar limits are allowed on most covered benefits beginning January 1, 2014.
The coverage for children up to age 26,
began in 2010.
Effective for Plan or Policy Years Beginning On or After September 23, 2010. Secretary Kathleen Sebelius called on leading insurance companies to begin covering young adults voluntarily before the implementation date required by the Affordable Care Act (which is plan or policy years beginning on or after September 23rd). Early implementation would avoid gaps in coverage for new college graduates and other young adults and save on insurance company administrative costs of dis-enrolling and re-enrolling them between May 2010 and September 23, 2010. Over 65 companies have responded to this call saying they will voluntarily continue coverage for young adults who graduate or age off their parents' insurance before the implementation deadline.
The Medical Loss Ratio requirement isn't really new either, that began in 2012 and is the large reason that
Rebate Checks have been mailed out for anyone whose plans didn't meet that standard.
A new provision of the Affordable Care Act — called the Medical Loss Ratio, or the “80/20″ provision — could mean some Americans will see a rebate from their health insurance companies tomorrow. The provision is aimed at holding health insurance companies accountable for how they spend the money collected through premiums. It compares the dollars they spend on health care costs vs. other overhead costs — like marketing, salaries and administrative expenses.
Providing a summary of benefits and ending arbitrary mid-policy cancellations does not prohibit the continuance of "Junk" or "Ford" or "
Red Solo Cup" styled plans. Grandfathered Plans don't have to provide for Preventive Care. They can still block coverage due to pre-existing conditions, although that point is moot since they can't accept new enrollees and in the individual market they can still avoid yearly coverage limits and impose fairly high deductibles. From what I can tell as of 2014 nothing significant changed or was required of these plans that wasn't already in place in 2012.
As a result the common rationale being used to explain and excuse why these plans have been cancelled simply isn't true. As David Axelrod stated in the All In segment following yours, the only plans that should have been cancelled are those that came into existence AFTER March of 2010 and therefore are not granted Grandfathered Status. All plans from before that time have already met the requirements of the ACA to continue.
This is why President Obama didn't and shouldn't have put any qualifications on his "You can keep your plan" statement, because as far as the ACA and plans that existed prior to it's implementation is concerned, he was right. There's NO GOOD REASON for Insurance Companies to stop offering these policies other than what [Dylan] discovered and what I found here on Wonkblog.
http://www.washingtonpost.com/...
These cancellations are, essentially, a lot of grandfathered plans exiting the insurance marketplace. From an insurance company's vantage point, grandfathered plans are a bit of a dead end: They can't enroll new subscribers and are really constrained in their ability to tweak the benefit package or cost-sharing structure. There's not a whole lot of business sense, for a managed care company, in maintaining a health plan that doesn't meet the health law's new requirements.
The only plans that can't go forward are new plans, not the so-called "junk" or "substandard" plans, any plan that existed in 2010 had to already meet the requirements it would need next year anyway. The Insurance Companies have chosen to cancel these policies in order to trick customers into the high rate plans NOW, rather than let them slowly pick and choose what might better suit them on the marketplace later with the knowledge that eventually the grandfathered plans are all going to wither on the vine and die off. Rather than wait for that, they found a "business opportunity" (aka SCAM) to send out these letters, lock customers into higher rate plans and keep their them off the exchanges.
So that's what I think. Could I be wrong? Maybe, but I don't see how. At least not yet, so I'm sticking to this story, for now.
Vyan
11:30 AM PT: As Coffeetalk has shown me in the comments some plans may not have met Grandfathered status because HHS tightened the regs to deny them this status if they changed their premiums, benefits and co-pays.
However the President still Defends This. http://talkingpointsmemo.com/...
"What we said was you could keep [your plan] if it hasn't changed since the law was passed," Obama said, as quoted by CBS News. "If the insurance company changes it ... they've got to change it to a higher standard."
Percentages on how many plans were impacted by this rule change range from 40% to 80%, which is all over the map. No one seems to have accurate numbers.
Yesterday the President said this arguing that these older plans should still be available, even though they are fairly lame. http://talkingpointsmemo.com/...
"Now, if you had one of these substandard plans before the affordable care act became law and you really liked that plan, you were able to keep it. That's what I said when I was running for office. That was part of the promise we made."
Here's how experts explain the situation: The law allowed insurers to continue covering customers with pre-ACA plans, but they couldn't enroll any new customers into those plans and they couldn't make significant changes to them.
After a while, that stops making business sense for insurers and so they've been canceling those so-called "grandfathered" plans. The coverage that would replace it, as prescribed by the law, is usually much more robust and therefore priced differently, as Sebelius and other officials have said when asked about the issue.
Again, this again says that many cancellations aren't because Obamacare forced them to, it's because the Insurers are simply phasing out those plans on their own,
even if they did meet HHS more stringent "Grandfathering" requirements.