There’s been lots of attention paid to the Obamacare exchange rollout, and the growing consensus seems to be that it’s been a disaster. Aside from a few Baghdad Bob impersonators in the White House and over at HHS, few people seem to be arguing that the performance of the online exchanges has been successful.
It could be about to get a lot worse.
As President Obama noted yesterday, “The Affordable Care Act is not just a website. It’s much more.” Part of the “much more” of Obamacare is throwing millions of Americans off of their current insurance policies because they don’t comply with the rich benefit requirements imposed by the law.
Yesterday Kaiser Health News had the following story:
Health plans are sending 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.
The main reason insurers offer is that the policies fall short of what the Affordable Care Act requires starting Jan. 1. Most are ending policies sold after the law passed in March 2010.
…the cancellation notices, which began arriving in August, have shocked many consumers in light of President Barack Obama’s promise that people could keep their plans if they liked them…
An estimated 14 million people purchase their own coverage because they don’t get it through their jobs. Calls to insurers in several states showed that many have sent notices.
Florida Blue, for example, is terminating about 300,000 policies… Kaiser Permanente in California has sent notices to 160,000 people… Insurer Highmark in Pittsburgh is dropping about 20 percent of its individual market customers, while Independence Blue Cross, the major insurer in Philadelphia, is dropping about 45 percent.
…Some receiving cancellations say it looks like their costs will go up, despite studies projecting that about half of all enrollees will get income-based subsidies.
Kris Malean, 56, lives outside Seattle, and has a health policy that costs $390 a month with a $2,500 deductible and a $10,000 in potential out-of-pocket costs for such things as doctor visits, drug costs or hospital care.
As a replacement, Regence BlueShield is offering her a plan for $79 more a month with a deductible twice as large as what she pays now, but which limits her potential out-of-pocket costs to $6,250 a year, including the deductible…
Blue Shield of California sent roughly 119,000 cancellation notices out in mid-September, about 60 percent of its individual business. About two-thirds of those policyholders will see rate increases in their new policies…
Like other insurers, the Blue Shield letters let customers know they have to make a decision by Dec. 31 or they will automatically be enrolled in a recommended plan.
The headline on the article says “thousands” are getting their insurance cancelled by Obamacare, but the three insurers cited here with hard numbers, covering just two states, add up to almost 580,000 people having their policies cancelled. It should be obvious that across all fifty states at least several million Americans, maybe 10 million or more, are having their insurance policies cancelled because of Obamacare.
If the exchanges were working, this might only be a serious problem. The people losing their insurance because of Obamacare could presumably buy new policies effective January 1, many of them at higher premiums or with narrower networks. But they’d at least be insured.
But, the exchanges aren’t working. And the deadline for people to sign up for new coverage through the exchange that will start on January 1 is December 15.
Between the front-end problems of the Obamacare web site, where people can’t even get in to the system to look at coverage options and select a new plan, and the back end problems, where insurers aren’t getting accurate information on new enrollees, it’s entirely possible that there will not be a functioning online exchange in time for the millions of Americans losing their existing coverage to buy new coverage by December 15.
Alternatives to the online system don’t seem to be viable options either, at least at this point. Megan McArdle wrote about this yesterday:
It’s true, there are call centers. But the computer systems at the call centers for states running the insurance exchanges are the same as the computer systems that consumers are having such a hard time with. A nice woman at a federal call center told me that (at least for the state of Florida, where my in-laws live) there is an alternate procedure: They can fill out a manual application in PDF format. But she also told me that it takes three weeks for that application to be mailed to your house. After you receive it, you check the application to ensure it’s accurate, and then mail it in. One to two weeks later, you will be notified of your subsidy eligibility. Then you can actually enroll in a plan, though she wasn’t quite clear on how that part would work — do you call back again?
Judging by the timeline described above, I’d guess that if you haven’t started the paper online enrollment process by November 1, there’s a decent chance you’re not going to be enrolled in time for new insurance effective January 1. And even if the front-end problems are resolved and people can actually access the exchange and chose a plan, there’s still the problem of the back-end systems and insurers not getting the accurate information they need to enroll people.
Those currently insured in the individual market will still have the option of just selecting the ‘replacement’ plan recommended by their current insurer, although plans purchased directly from the insurer aren’t eligible for subsidies (and even if they were, many wouldn’t qualify for them).
There’s also the problem of the ‘replacement’ policies typically being much more expensive than the current policy, making them simply unaffordable for many. One outraged supporter of Obamacare wrote the following on the DailyKos web site:
My wife and I just got our updates from Kaiser telling us what our 2014 rates will be. Her monthly has been $168 this year, mine $150. We have a high deductible. We are generally healthy people who don’t go to the doctor often. I barely ever go. The insurance is in case of a major catastrophe.
Well, now, because of Obamacare, my wife’s rate is gong to $302 per month and mine is jumping to $284.
I am canceling insurance for us and I am not paying any ******* penalty. What the hell kind of reform is this?
So it’s entirely possible that millions of Americans who are insured today will be uninsured on January 1, 2014, solely because Obamacare terminated their existing policies and then sent them to buy a replacement policy on exchanges that do not allow them to buy policies, with the only alternatives being either unworkable in the needed timeframe or unaffordable.
If I were one of the millions of Americans reading a cancellation notice for my existing insurance policy and I didn’t want to be without any coverage on January 1, I’d be sure I’ve either got my paper application requested in the next week, or I’m looking at non-traditional options like health sharing ministries or short-term health insurance. Because there’s no way I’d be willing to cross my fingers and hope that the online exchanges will be fully functioning before December 15.