Shortly after the FitzGerald campaign put out a release this morning detailing the numerous instances where John Kasich failed to check Mary Taylor’s incompetence as the head of the Department of Insurance, the Plain Dealer reported a new example today. The article notes that many Ohioans are being forced into buying more expensive policies because of a bottleneck at the Department of Insurance.
Pre-Obamacare insurance policies are expiring, rates are rising for some,
because of Ohio bottleneck
By Stephen Koff | June 09, 2014 at 1:34 PM
WASHINGTON, D.C. – Ohio insurers are letting pre-Obamacare health policies expire and proposing new, sometimes more expensive coverage for individual customers because of a bottleneck at the Ohio Department of Insurance, The Plain Dealer has found.
The Ohioans affected may get better coverage in some cases, but they don’t necessarily want it. And they recall that President Barack Obama had said, “If you like your plan, you can keep your plan.”
Obama did, in fact, say that repeatedly. His administration even followed up with a rule this year allowing the old policies to stay in force as late as 2017, an extension insurers were not expecting.
But this requires state regulatory approval, too, and Ohio is running behind, apparently swamped with the necessary filings and reviews. Until insurers get approval, they say they cannot renew old policies that reach their expiration.
That means people such as John D. Brown, a certified public accountant in Solon, are getting notices that they cannot keep their old policies. Brown said he got a letter from Anthem Blue Cross and Blue Shield saying that under the ACA, it can’t extend his old policy past Sept. 1.
That policy has a $11,000-per-person deductible – higher than allowed under new Affordable Care Act policies — and if Brown, his wife and his son all got sick, they could be out of pocket $22,000. But Brown said that by putting aside money in a health savings account, the deductible made financial sense for him.
But he faces losing the policy on Sept. 1. Anthem has already offered Brown and his family a policy with much fuller benefits and a lower deductible under the Affordable Care Act, or ACA – but with premiums rising from his $460 monthly sum now to $1,194.
That’s a hike of 160 percent.
Brown and his family could choose a somewhat more modest plan, but the premiums would still be around $1,000 a month. While that’s in the ballpark of what many families pay now, it is not what Brown wants.
Another CPA in Northeast Ohio who similarly likes his old policy got a notice from his insurer, Medical Mutual of Ohio, saying that “with this renewal, we are changing your policy as required by the ACA.” This accountant asked that his name be withheld but provided personal information and documentation of his current and prospective policies to The Plain Dealer. His premiums would rise on July 1 from $383.27 a month to $696.58.
That’s an 82 percent hike.
It is unclear how many other Ohioans are getting these notices and how many have lost their old policies already.
The insurers say they have no choice but to send the notices.
The problem grew out of state and federal regulatory requirements for health insurance. The ACA, commonly referred to as Obamacare, required that starting this year, health insurance policies must provide at least a baseline of essential benefits. Insurers can no longer deny coverage or base premiums on someone’s pre-existing conditions. An insurer’s oldest clients – who typically use more benefits — cannot be charged more than three times the premiums of the youngest. With a few exceptions, the most an individual can be required to pay out-of-pocket in any year is $6,350, although many policies with lower deductibles and lower doctor co-payments (but higher premiums) are available.
The ACA’s goal was to balance out the cost of health insurance for all Americans, providing tax subsidies for many. But this meant people who had individual policies rather than coverage through their workplace faced changes in their coverage and costs.
Last November, after millions of Americans got notices that they must change their individual policies to comply with the ACA, the Obama administration granted a reprieve and said existing, pre-ACA policies could be renewed for anther year. Obama was under political fire because of his earlier you-can-keep-it statements.
The Obama administration said people could keep their old policies, but a delay at the state level is causing problems for some pre-ACA policyholders.
Then on March 5, the U.S. Department of Heath and Human Services granted an even longer extension, allowing renewals into the year 2017 as long as insurance companies and states said it was okay.
The Ohio Department of Insurance, or ODI, said it was fine, issuing a bulletin to insurers on April 22.
But there is a problem. These policies tend to be renewed a year at a time, and the state Department of Insurance requires annual filings to justify premium changes. ODI employees review the filings, ask questions and exchange information with insurers before granting approval.
This has been a slow process. Meantime, insurers must notify clients 90 days in advance if they will not renew a policy.
That’s why notices for many existing policies have gone out already. It is already too late for some policies that have expired by now.
“You cannot issue unapproved rates,” said Trish Decensi, vice president and general counsel for Medical Mutual.
“As soon as ODI made that announcement” on April 22, “we made that rate filing,” she said. “We’re still waiting on that approval.”
Decensi said she did not know how many Medical Mutual policyholders have been affected. She said the company would very much like to continue offering the old coverage to those who wanted it, but by law it cannot.
Anthem Blue Cross would not discuss its cancellations or notices in any detail, saying it preferred to communicate directly with its customers.
“Consumers should consider all their options in the coming year, as new ACA requirements provide them access to plans with comprehensive benefits and cost-sharing choices,” said a statement from Anthem spokeswoman Kim Ashley.
ODI has not yet provided information sought by The Plain Dealer since Thursday on the extent of the problem and the number of filings it must review. This article will be updated when the department responds. One problem ODI may be facing is that it also is reviewing new rate requests for 2015, submitted recently for ACA-compliant policies. The volume of filings may exceed its capacity for a quick turnaround.
HHS declined to comment, saying only that it hopes the state can complete its reviews as quickly as possible.
Decensi, of Medical Mutual, noted that some people who lose their old policies could wind up with not only fuller benefits but also lower premiums. Some will qualify for tax subsidies as well.
“It depends on your situation,” she said.
But Brown, the Solon CPA, has run the numbers numerous ways and says his old policy better fit his personal and financial situation.
He said that “the policy we have now is a fine policy and covers everything we need it to cover, which is why we chose it. The problem is we now have to pay for everyone else.”