By Leesa Tori, Principal & Founder, The Tori Group
Not surprisingly, the last few weeks’ buzz was pretty loud from folks receiving cancellation notices on their health insurance policies. And why shouldn’t it have been? Wasn’t health care reform designed to make coverage more accessible, not less?
To turn down the volume on this, the Administration decided to permit plans on track for cancellation to exist for as long as another year, to help out folks who don’t want to contend with making a switch. But here in California, it was decided that such an approach was missing the point. In fact it was referred to as “the tail wagging the dog,” where at best it would just put off for another year the inevitable cancellation of inferior health plans, and at worst jeopardize the delicate balance of repairing a broken health insurance system.
The plans that are being discontinued are generally part of the capricious, expensive, and not particularly pretty individual health insurance market – the slice of the population that does not have coverage through an employer or other group, either because it’s not offered or because what’s offered is not appealing. Sometimes from the self-employed contingent of the workforce, other times from small businesses not offering their own employee coverage, these folks have until now been a captive population with few choices, more often than not on the high-risk side of health insurance consumers. They’ve been between a rock and a hard place for a long time and have had to contend with raided benefits, increasing premiums, and rising deductibles. Policy cancellations seem like another slap in the face. Until one has all the facts.
These cancellations are happening for good reason. Many of the health insurance plans that are going away did not meet new minimum standards for health care plans under the ACA. Some lacked prescription drug coverage, while others didn’t provide maternity care or mental health benefits. These skimpy plans are being phased out, and good riddance to them, so that plans with robust, comprehensive offerings will be universally available.
We know that if healthy, low utilizers don’t enroll and only high utilizers do, our health insurance system will remain broken. Risk must be spread over populations of various levels of utilization. Ensuring that everyone enrolls, regardless of their health status, in a plan meeting minimum standards, is what’s going to make health insurance successful in the United States.
The good news is that folks are being offered new, better plans, either by their state health insurance exchanges or their insurance carriers. And many of those whose policy prices are going up are eligible for a share of the Federal set-aside of subsidies and tax credits. Prolonging the life of plans that need to be put to rest because they don’t meet new, minimum Federal standards stands in the way of everyone having the same basic health insurance coverage -- the only way to truly spread costs.
And for some, this is a bitter pill.
Because these new plans are more robust, they cost more. In fact, even some plans that are not being substantially enriched are increasing in price. This is the inescapable upshot of moving from a system where premium prices were determined by factors like health status, which kept a lot of people from being insured to begin with, to one where everyone gets to join the club. For these consumers, population statistics don’t ease the sting of writing a bigger check every month, which is why this is only the beginning of health care reform. Step one was to ensure that everyone could purchase coverage. Step two will be to improve delivery, lower costs, and identify new efficiencies.
What needs reiterating is that the individual plans in which many are enrolled are not being cancelled per se. Rather, they are being morphed into plans that meet basic requirements under the new rules of the ACA. No more bailing on mental health coverage, maternity plans, or prescription drugs. This way, with both the folks who have immediate need for these features, and folks who don’t (and may or may not in the future), paying into the pool, costs are spread around and insurance works the way it’s supposed to.
So long to the inferior plans and welcome to the new ones. Now everyone has an equal chance for the same health care coverage (and for those who can afford to “buy-up,” go right ahead). The decision by California to stay the course and continue requiring the cancellation of noncompliant plans to keep everyone equally in the risk pool, was made not made lightly. Much heated and late-into-the-night discussion and debate surrounded how to continue moving California toward the goal of equal coverage for all. Washington had best interests at heart by allowing states to consider postponing cancellation of noncompliant health plans. But this approach only would have served to delay the inevitable. The plans would eventually have to be done away with. A 12-month extension would just present the same problem again in a year.
With health insurance coverage both required of and available to all Americans, the wealthiest country in the world is at last making sure one of the most basic of human needs is within the reach of every one of its citizens.
Not surprisingly, the last few weeks’ buzz was pretty loud from folks receiving cancellation notices on their health insurance policies. And why shouldn’t it have been? Wasn’t health care reform designed to make coverage more accessible, not less?
To turn down the volume on this, the Administration decided to permit plans on track for cancellation to exist for as long as another year, to help out folks who don’t want to contend with making a switch. But here in California, it was decided that such an approach was missing the point. In fact it was referred to as “the tail wagging the dog,” where at best it would just put off for another year the inevitable cancellation of inferior health plans, and at worst jeopardize the delicate balance of repairing a broken health insurance system.
The plans that are being discontinued are generally part of the capricious, expensive, and not particularly pretty individual health insurance market – the slice of the population that does not have coverage through an employer or other group, either because it’s not offered or because what’s offered is not appealing. Sometimes from the self-employed contingent of the workforce, other times from small businesses not offering their own employee coverage, these folks have until now been a captive population with few choices, more often than not on the high-risk side of health insurance consumers. They’ve been between a rock and a hard place for a long time and have had to contend with raided benefits, increasing premiums, and rising deductibles. Policy cancellations seem like another slap in the face. Until one has all the facts.
These cancellations are happening for good reason. Many of the health insurance plans that are going away did not meet new minimum standards for health care plans under the ACA. Some lacked prescription drug coverage, while others didn’t provide maternity care or mental health benefits. These skimpy plans are being phased out, and good riddance to them, so that plans with robust, comprehensive offerings will be universally available.
We know that if healthy, low utilizers don’t enroll and only high utilizers do, our health insurance system will remain broken. Risk must be spread over populations of various levels of utilization. Ensuring that everyone enrolls, regardless of their health status, in a plan meeting minimum standards, is what’s going to make health insurance successful in the United States.
The good news is that folks are being offered new, better plans, either by their state health insurance exchanges or their insurance carriers. And many of those whose policy prices are going up are eligible for a share of the Federal set-aside of subsidies and tax credits. Prolonging the life of plans that need to be put to rest because they don’t meet new, minimum Federal standards stands in the way of everyone having the same basic health insurance coverage -- the only way to truly spread costs.
And for some, this is a bitter pill.
Because these new plans are more robust, they cost more. In fact, even some plans that are not being substantially enriched are increasing in price. This is the inescapable upshot of moving from a system where premium prices were determined by factors like health status, which kept a lot of people from being insured to begin with, to one where everyone gets to join the club. For these consumers, population statistics don’t ease the sting of writing a bigger check every month, which is why this is only the beginning of health care reform. Step one was to ensure that everyone could purchase coverage. Step two will be to improve delivery, lower costs, and identify new efficiencies.
What needs reiterating is that the individual plans in which many are enrolled are not being cancelled per se. Rather, they are being morphed into plans that meet basic requirements under the new rules of the ACA. No more bailing on mental health coverage, maternity plans, or prescription drugs. This way, with both the folks who have immediate need for these features, and folks who don’t (and may or may not in the future), paying into the pool, costs are spread around and insurance works the way it’s supposed to.
So long to the inferior plans and welcome to the new ones. Now everyone has an equal chance for the same health care coverage (and for those who can afford to “buy-up,” go right ahead). The decision by California to stay the course and continue requiring the cancellation of noncompliant plans to keep everyone equally in the risk pool, was made not made lightly. Much heated and late-into-the-night discussion and debate surrounded how to continue moving California toward the goal of equal coverage for all. Washington had best interests at heart by allowing states to consider postponing cancellation of noncompliant health plans. But this approach only would have served to delay the inevitable. The plans would eventually have to be done away with. A 12-month extension would just present the same problem again in a year.
With health insurance coverage both required of and available to all Americans, the wealthiest country in the world is at last making sure one of the most basic of human needs is within the reach of every one of its citizens.
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