The Real Reasons Insurers Are Canceling Policies
Now that President Obama has said it's OK with him if insurance
companies keep their policyholders in health plans that don't meet the
standards established by the Affordable Care Act, at least for another
year, the big question is whether insurers will take him up on the
offer.
The answer: it depends.
Some insurance executives will view the offer as one they can't turn
down. Even though Karen Ignagni, president of America's Health Insurance
Plans, the industry's big PR and lobbying group, had nothing good to
say about Obama's proposal, keep in mind that she doesn't run an
insurance company. While industry executives look to her to comment on
what politicians do, they make their own decisions when it comes to
their companies' bottom lines.
Here's what Ignagni was quoted as saying in a FOX News story Friday:
Not so fast. There are other reasons some folks are being told they'll have to change health plans next year. Many of them are having to switch plans not because of Obamacare but because their insurance companies want to move them into policies with higher profit margins.
Insurance companies have been sending similar notices to their customers for years. My son Alex -- and thousands of other customers of a Blue Cross plan in Pennsylvania -- got such a notice four years ago, months before Congress passed the health reform law.
Why? The insurer wanted to move those policyholders out of a plan with a reasonable $500 annual deductible and into one with a deductible ten times that amount. To accomplish that, Blue Cross notified its policyholders that their health plan would not be available in 2010. Their options were to switch to the high-deductible policy, which would still cost them a couple of dollars more each month, or to another plan with that reasonable $500 deductible. If they chose the latter, their monthly premiums would increase 65 percent.
Notices like the one Alex got have provided a mechanism for insurers to implement a years-long industry strategy of shifting more and more of the cost of medical care to their policyholders. And that strategy will continue until every last one of us is in a high-deductible plan.
Some of you are likely old enough to remember the days before managed care when almost all Americans with private health insurance were in indemnity plans. In an old-fashioned indemnity plan, the insurer didn't constrain us in a limited network of doctors and hospitals and didn't call the shots about whether a knee replacement or liver transplant your doctor recommended was really necessary.
The answer: it depends.
Here's what Ignagni was quoted as saying in a FOX News story Friday:
Not so fast. There are other reasons some folks are being told they'll have to change health plans next year. Many of them are having to switch plans not because of Obamacare but because their insurance companies want to move them into policies with higher profit margins.
Insurance companies have been sending similar notices to their customers for years. My son Alex -- and thousands of other customers of a Blue Cross plan in Pennsylvania -- got such a notice four years ago, months before Congress passed the health reform law.
Why? The insurer wanted to move those policyholders out of a plan with a reasonable $500 annual deductible and into one with a deductible ten times that amount. To accomplish that, Blue Cross notified its policyholders that their health plan would not be available in 2010. Their options were to switch to the high-deductible policy, which would still cost them a couple of dollars more each month, or to another plan with that reasonable $500 deductible. If they chose the latter, their monthly premiums would increase 65 percent.
Notices like the one Alex got have provided a mechanism for insurers to implement a years-long industry strategy of shifting more and more of the cost of medical care to their policyholders. And that strategy will continue until every last one of us is in a high-deductible plan.
Some of you are likely old enough to remember the days before managed care when almost all Americans with private health insurance were in indemnity plans. In an old-fashioned indemnity plan, the insurer didn't constrain us in a limited network of doctors and hospitals and didn't call the shots about whether a knee replacement or liver transplant your doctor recommended was really necessary.
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