WASHINGTON — Many people who buy their own health insurance could get surprises in the mail this fall — cancellation notices because their current policies aren’t up to the basic standards of President Barack Obama’s health care law.
They, and some small businesses, will have to find replacement plans, which has some state insurance officials worried about consumer confusion.
Rollout of the Affordable Care Act is going full-speed ahead, despite repeal efforts by congressional Republicans. New insurance markets called exchanges are to open in every state this fall, although South Carolina has opted not to join.
Middle-class consumers who do not get coverage on the job will be able to pick private health plans, while low-income people will be steered to an expanded version of Medicaid in states that accept it.
The goal is to cover most of the nation’s nearly 50 million uninsured, but even Obama has said there will be bumps in the road. And discontinued insurance plans could be one such bump.
Also, it doesn’t seem to square with one of the president’s best known promises about his health care overhaul: “If you like your health care plan, you’ll be able to keep your health care plan.”
Supporters of the overhaul are betting that consumers won’t object once they realize that the coverage they will get under the new law is superior to current bare-bones insurance. For example, insurers will no longer be able to turn people down because of medical problems.
Other bumps on the road to the new health care law include potentially unaffordable premiums for smokers unless states act to waive them, a new, $63-per-head fee that will hit companies already providing coverage to employees and dependents, and a long-term-care insurance program that had to be canceled because of the risk it could go belly up.
The Obama administration did not respond directly to questions about the potential fallout from cancellation notices. Instead, Health and Human Services spokeswoman Joanne Peters released a statement saying, “Beginning in October, individuals and small businesses will be able to shop for insurance in the marketplace, where we are already seeing that increased competition and transparency are leading to a range of options for quality, affordable plans.”
For the most part, state insurance commissioners are giving insurers the option of canceling existing plans or changing them to comply with new federal requirements. Large employer plans that cover most workers and their families are unlikely to be affected.
Seen as consumer safeguards by the administration, the new requirements limit costs paid by policyholders, and also expand benefits. That includes better preventive care, and also improved prescription coverage in many cases. The most important feature may be protection for your pocketbook if you get really sick: The new plans limit co-payments and other out-of-pocket costs to $6,400 a year for individuals.
The National Association of Insurance Commissioners said it is hearing that many carriers will cancel policies and issue new ones because administratively that is easier than changing existing plans.
About 14 million Americans currently purchase their health policies individually, a number expected to more than double eventually because of the new law’s subsidies and one-stop insurance markets. But the transition may not be seamless.
“The impending changes ... have the potential to cause policyholder confusion,” said a recent memo from Iowa Insurance Commissioner Nick Gerhart to insurers.