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Monday, November 18, 2013

POLITICO: So, what could go wrong next?

More cancellations close to the election
There’s another, separate issue with the cancellations. Some have actually been pushed into next year, because some insurers have offered early renewals — in which individuals or small businesses who renew their policies before the end of the year can keep them into 2014.

For example, Elaine Buccieri of Arlington, Texas, was able to get that kind of deal from Blue Cross Blue Shield of Texas. The carrier just moved everyone’s anniversary date to December, giving them more time in their old plans.

But that kind of renewal only carries people into 2014, raising the possibility that those people, and small businesses, could just get another wave of cancellation letters next year. And those letters would have to go out early enough to give them time to sign up for new policies — meaning they could go out in the fall, right before the mid-term elections.

“This is really getting backloaded into December 2014,” said Laszewski, who got an early renewal option with his own cancellation notice from CareFirst.

It’s not clear how widespread the practice is. A Commonwealth Fund blog post said it has been allowed in states like Arkansas, Colorado, Montana, Idaho and Kentucky, usually with some strings attached. And Sabrina Corlette of Georgetown University, one of the researchers who wrote the blog post, says more than 80 percent of small businesses in Wisconsin have taken the early renewal option — and of the individual insurance cancellation notices she was able to review, three out of four offered early renewals.

The Obama administration fix could take care of some of the problem, because it allows existing health plans to be renewed any time before Oct. 1, 2014. But again, not all states will allow it, and not all insurers will do it — so it’s not clear that the fix would take pre-election cancellations completely off the table.

Sticker shock

Obamacare supporters are convinced that once people with canceled policies can actually use the federal website, they’ll be able to find replacement health plans that are better and cheaper than what they have now, not just the expensive replacements their own insurers are offering up.

But Paul Ginsburg, president of the Center for Studying Health System Change, says that’s not going to be true of everyone. He says some people will go to the website and be dismayed by the prices — because they now have to include coverage of everyone with pre-existing conditions, new benefits that weren’t covered by all individual plans before, and a ban on charging older customers more than three times as much as younger people.

That doesn’t mean everyone will actually pay the sticker price. Many people will qualify for subsidies, which could mask any increases. But not everyone will get subsidies — a lot of people who will need coverage will find that their incomes are too high.

Ginsburg says the Obama administration will have to do something about “sticker shock,” but they won’t be able to backtrack on covering pre-existing conditions — that’s too central to the law’s goals.

The limits on age-related pricing, however, are less crucial and could probably be rolled back to reduce the prices, he said.

There could also be another level of sticker shock not just over the premiums, but over the other out-of-pocket expenses people will have to pay.

A good example is the deductible — the amount of medical expenses someone has to pay before coverage even begins. All private health insurance has deductibles — that’s not unique to Obamacare. But a survey of 22 health insurers in six states by Avalere Health, a consulting firm, found that the average deductible is $2,550 in “silver” Obamacare plans (the second-cheapest kind).

That’s compared to the $1,135 average that nearly eight out of 10 people in employer-sponsored health plans had to pay.

The deductibles are even higher in “bronze” plans, the cheapest kind. The average bronze deductible was $5,150 — and some were as high as $6,350.

“We all knew this was going to happen, but there could be another round of shock” when people actually try to use their Obamacare coverage and realize it doesn’t pay for everything, said one health insurance industry official. (Bad news continues...)

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