Some health insurance gets pricier as Obamacare rolls out Los Angeles Times
Kaiser:
Health plans are sending hundreds of thousands of cancellation letters to people who buy their own coverage,...The main reason insurers offer is that the policies fall short of what the Affordable Care Act requires starting Jan. 1
Florida Blue, for example, is terminating about 300,000 policies, about 80 percent of its individual policies in the state. Kaiser Permanente in California has sent notices to 160,000 people – about half of its individual business in the state. 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.
LA Times:
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....
Middle-income consumers face an estimated 30% rate increase, on average, in California due to several factors tied to the healthcare law. Some may elect to go without coverage if they feel prices are too high. Penalties for opting out are very small initially. Defections could cause rates to skyrocket if a diverse mix of people don't sign up for health insuranceThis is interesting. Obamacare could actually increase the number of people without insurance, because you are not allowed to keep (consumer) or sell (insurance company) simple cheap insurance.
If you're healthy and have been paying for individual insurance all along -- largely because you know people with preexisting conditions can't get insurance, and you want to lock in your right to continue your policy should you get sick -- there is now a strong incentive to drop out.
The government has just wiped out the value of those premiums you paid all these years -- you don't need the right to buy health insurance anymore, as you can always get it later. You're seeing a large increase in premiums for benefits you don't want and to cross-subsidize other people. The mandate penalties are almost certainly going to be pushed back, they penalties are a good deal less than the cost of health insurance (which you can always get later if you get sick), the IRS has already said it's not going after people who don't pay them. Dropping out of individual health insurance starts to make a lot of sense.
This was bad enough on its own. But if insurance companies cancel these people's policies, all at once, it's dramatically worse. It would be hard to design a more effective "nudge" to get such people to think about it and conclude that dropping health insurance is a good idea.
The overall numbers may not change. Other reports suggest that poor and sick people have been signing up in droves, mostly to get on the expanded medicaid. But it's an obvious fiscal disaster if Obamacare only attracts the poor and sick, does not attract the young and healthy -- and now drives away the healthy people who were provident enough to buy individual health insurance!
Why is this happening? A curious tidbit
All these cancellations were prompted by a requirement from Covered California, the state's new insurance exchange. The state didn't want to give insurance companies the opportunity to hold on to the healthiest patients for up to a year, keeping them out of the larger risk pool that will influence future rates.The destruction of the off-exchange individual insurance market is deliberate.
The best quote of the bunch, from the LA Times
Pam Kehaly, president of Anthem Blue Cross in California, said she received a recent letter from a young woman complaining about a 50% rate hike related to the healthcare law.This realization will come soon to millions more.
"She said, 'I was all for Obamacare until I found out I was paying for it,'" Kehaly said.
