As the number of individual health care policies that have been cancelled allegedly because of the Patient Protection and Affordable Care Act continues to increase, including the recent announcement of more than a million California policies, the pressure from both sides of the aisle has forced the president to make concessions.
Last week, the president announced administrative changes that would allow insurance companies to continue to sell non-ACA-compliant policies. This would, in effect, corrode the risk pool needed for ACA to succeed, as younger, healthier patients can opt to keep their cheaper existing policies. “This fix won’t solve every problem for every person, but it’s going to help a lot of people,” the president said.
In reality, this churning, or systematic cancellation, of individual insurance policies did not start with the ACA. Commonwealth Fund reported that as early as 1998, 22 percent of Americans were uninsured at least once due to cancellations of policies. Health insurance has always been a single-year policy, and health insurance companies, through their policies, seek the best way to push more of the health care to the consumer. Recent revelations about the nature of cheap individual policies may bear light on why they were not grandfather-able under ACA, and why they may represent a scam of the poor and uninformed by insurance providers.
TurningPointsMemo recently profiled USHealth Group, which has been persuading consumers to turn away from the ACA while touting minimum-coverage, ACA non-compliant plans. These plans, which include fixed-benefit coverage, a limited policy that pays up to a certain amount for specific medical situations, represent a business opportunity for USHealth and other insurers, despite the healthcare industry deriding them as “junk insurance.”
“They were not intended to be health insurance,” Sabrina Corlette, a research professor at the Health Policy Institute at Georgetown University, told TPM. “They were intended to be what are called income-replacement policies. … But over the years, these things have kind of morphed. And for many people, unfortunately, mainly because they come with a cheaper sticker price, they are marketed as and treated as health insurance, even though the coverage is really crappy.”
Products, such as “mini-meds,” which impose a capped annual dollar amount on benefits offered in exchange for a small premium, such as McDonald’s “McCrew Care” plan, which offers $2,000 in benefits for $56 a month; medical discount cards and fixed-benefit indemnity plans, which offers a set reimbursement limit on medical services — are being sold to customers who have been frightened by the ACA, or who are unsuspecting.
In a pamphlet sent out by USHealth entitled “PPACA & You,” the company states that “[the] IRS estimates that by 2016 the lowest level [PPACA] Qualified Health Plans for a family of five will cost at least $20,000 per year,” and “[although] subject to a tax penalty, the lower premiums associated with the purchase of PPACA exempt products may actually result in significant savings vs. the cost of an Essential Benefits Plan.”
In a press release last November, USHealth promoted its fixed-rate products to small businesses and the self-employed as a flexible alternative to “the predicted rise in health care premiums” associated with the ACA.
USHealth isn’t the only company that sells fixed-benefit plans. A key strength of the ACA is the requirement that policies that do not offer full, unlimited indemnity coverage can no longer be sold as proper health care insurance packages. In allowing consumers to hold on to these in-name-only insurance policies, it creates a situation in which medical costs will continue to spike as holders of these policies will not have adequate coverage for catastrophic care, and where the ACA will collapse due to not having enough healthy individuals joining the insurance risk pool.
As insurance companies continue to play the role of bad guy in this ongoing drama — by not informing customers of the possibility of better deals on the exchanges, by rolling customers automatically to more expensive plans after cancelling their existing plans “due to the ACA,” and by intentionally deceiving customers and playing off the political confusion surrounding the ACA — the call for the government to take the lead and push back against such corporate malpractice has never been louder. It’s a shame that the call is being lost in partisan bickering.
“This is a great example of the kind of consumer abuses that are typical of the insurance industry, and they’re supposed to stop under the ACA,” Ethan Rome, executive director of Health Care For America Now, a pro-Obamacare advocacy group, told TPM. “In this case, they’re trying to get in just one more abuse.”