Since the Oct. 1 rollout of the Affordable Care Act’s health care insurance exchanges, the number of problems facing the experiment in offering health insurance to the uninsured has only increased. Among the latest includes news that employer-based insurance plan cancellations currently outnumber new enrollments in the exchanges’ plans. In addition, the number of companies that opted out of employer-paid health insurance due to increasing cost — including Home Depot, UPS, Trader Joe’s and IBM — has increased.
Recently, many of the major insurance companies have slashed individual policies. For example, insurance carrier Florida Blue has sent out 300,000 cancellation notices — representing 80 percent of its individual coverage policies in the state. Kaiser Permanente of California canceled 160,000 plans — half of the company’s individual insurance plans in the state. Blue Shield of California sent 119,000 cancellation notices in mid-September. Insurance Highmark in Pittsburgh, Penn. has announced plans to cancel 20 percent of its individual plans, while Independence Blue Cross in Philadelphia announced the cancellation of 45 percent of its equivalent plans.
According to the National Institute for Health Care Reform, the number of employer-based plans being offered is shrinking. From 2007 to 2010, the percentage of children and working-age adults in the United States with employer-sponsored health insurance dropped from 63.6 percent to 53.5 percent. While a major unemployment spike from the Great Recession contributed to this, since 2010 the percentage has actually dropped at a sharper rate.
President Obama predicted this. “I can guarantee you that there’s the possibility for a whole lot of Americans out there that they’re not going to end up having the same health care they have,” the president told ABC News’ Diane Sawyer. “Because what’s going to happen is, as costs keep on going up, employers are going to start making decisions: ‘We’ve got to raise premiums on our employees. In some cases, we can’t provide health insurance at all.’
“That’s the case whether we pass health care or not. The fact is that right now, all across the country, people are losing their health care. Every day.”
While many are quick to blame the current rash of cancellations on Obamacare, current evidence suggest that the recent trend of cancellations started well before the passage of the ACA — and that the ACA is being falsely blamed. The insurance companies have alleged that the policies were cancelled due to a heightened standard demanded from ACA.
Independence and Highmark, for example, have cancelled their “guaranteed issue” policies, which were sold to customers with pre-existing medical conditions. Customers with no reported health problems, however, have been offered one-year extensions to their coverage.
This may be an attempt to purge the system of the most costly plans. According to Jerry Flanagan, an attorney with the advocacy group Consumer Watchdog in California, the insurance providers may be “doing this as an opportunity to push their populations into the exchange and purge their systems” of policyholders they no longer want.
This reflects a shifting of increasing cost in health coverage. Several employers — including UPS, Delta and the University of Virginia — have cited the ACA as the reason for reducing insurance benefits, including the cutting of spousal benefits if the spouse can secure coverage elsewhere. Trader Joe’s and Home Depot have moved part-time workers to the exchanges. IBM and Time Warner have moved their retirees to private exchanges, while Walgreens plans to move all of their employees to a private exchange next year.
“An increase in costs of a few percent isn’t enough to cause widespread changes in benefits,” said Larry Levitt, senior vice president at the Kaiser Family Foundation.
According to the Kaiser Family Foundation and as reported by the Washington Post, prior to the passage of the ACA:
“Forty percent of employers surveyed said they are likely to increase the amount their workers pay out of pocket for doctor visits. Almost as many said they are likely to raise annual deductibles and the amount workers pay for prescription drugs.
“Nine percent said they plan to tighten eligibility for health benefits; 8 percent said they plan to drop coverage entirely. Forty-one percent of employers said they are ‘somewhat’ or ‘very’ likely to increase the amount employees pay in premiums — though that would not necessarily mean employees would pay a higher percentage of the premiums. Employers could simply be passing along the same share of the overall increase that they are doing this year.”
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