Insurance cancellation wave another headache for Obama

Associated Press

House Ways and Means Committee member Rep. Kevin Brady, R-Texas, right, accompanied by fellow committee member Rep. Paul Ryan, R-Wis., questions Marilyn Tavenner, the administrator of the Centers for Medicare and Medicaid Services, during the committee's hearing Tuesday on Capitol Hill in Washington on problems with the implementation of the Affordable Care Act. As the senior Obama administration official closest to the implementation of the health care law's dysfunctional website, Tavenner is getting tough questions from the Republican-controlled panel about whether she saw the problems coming and will things be running efficiently by the end of November as promised.

WASHINGTON — Move over, website woes. Lawmakers confronted the Obama administration Tuesday with a difficult new health care problem — a wave of cancellation notices hitting small businesses and individuals who buy their own insurance.

At the same time, the federal official closest to the website apologized for its dysfunction in new sign-ups and asserted things are getting better by the day.

Medicare chief Marilyn Tavenner said it's not the administration but insurers who are responsible for cancellation letters now reaching many of the estimated 14 million people who buy individual policies. And, officials said, people who get cancellation notices will be able to find better replacement plans, in some cases for less.

The Associated Press, citing the National Association of Insurance Commissioners, reported in May that many carriers would opt to cancel policies this fall and issue new ones. Administratively that was seen as easier than changing existing plans to comply with the new law, which mandates coverage of more services and provides better financial protection against catastrophic illnesses.

While the administration had ample warning of the cancellations, they could become another public relations debacle for President Barack Obama's signature legislation. This problem goes to the credibility of one of the president's earliest promises about the health care overhaul: You can keep your plan if you like it.

In the spring, state insurance commissioners started giving insurers the option of canceling existing individual plans for 2014, since the coverage required under Obama's law is more robust. Some states directed insurers to issue cancellations. Large employer plans that cover most workers and their families are unlikely to be affected.

The cancellation notices are now reaching policyholders, and they've been complaining to their lawmakers — who were grilling Tavenner on Tuesday.

"Based on what little information the administration has disclosed, it turns out that more people have received cancellation notices for their health care plans this month than have enrolled in the (health care website)," said Ways and Means Chairman Dave Camp, R-Mich. He cited a news report of 146,000 cancellations in his state alone.

Up and down the dais, lawmakers chimed in with stories of constituents who had received similar notices. Republicans offered examples of people being asked to pay more.

Democrats countered by citing constituents who had been able to find lower-cost coverage than they have now. Ranking Democrat Sander Levin of Michigan said one of his constituents has been paying $800 a month for a BlueCrossBlueShield plan and managed to find comparable coverage for $77, after tax credits that lower the premiums.

Still, Levin added, "this has become a matter of legitimate discussion."

It could take months to sort out the balance of individual winners and losers. There's not a central source of statistics on how many people have gotten cancellations. Even the number of people who buy insurance individually is disputed.

It isn't the administration's fault, said Tavenner. "In fact the issuer has decided to change the plan; (they) didn't have to."

Obama's promise dates back to June 2009, when Congress was starting to grapple with overhauling the health care system to cover uninsured Americans.

"If you like your health care plan, you'll be able to keep your health care plan, period," the president said in remarks to the American Medical Association. "No one will take it away, no matter what."

Some immediately saw the promise as too broad to deliver on, given that health plans are constantly being changed by the employers that sponsor them or by insurers directly.

Nonetheless, Democrats in Congress devised a complicated scheme called "grandfathering" to try to make good on Obama's pledge. It shields plans from the law's requirements, provided the plans themselves change very little. Insurers say it has proven impractical.

The White House weighed in Tuesday, with spokesman Jay Carney saying the changes are part of a transition to better coverage. "The good news," he said, "is that for every one of these individuals who might have a plan that is almost by definition providing less than minimal benefits ... you are now being offered a variety of options, including options by the very insurer that covers you already, for new coverage."

Critics say that's like an airline forcibly upgrading you from economy to business class, and exposing you to a higher ticket price.

Proponents of the health care law offered evidence to support the administration's position that losing coverage could be advantageous. In California, Anne Gonzalez, a spokeswoman for the state's health care exchange, Covered California, said that about 900,000 people are expected to lose existing plans that do not provide the minimum level of coverage required under the health care law.

"They basically had plans that had gaping holes in the coverage. They would be surprised when they get to the emergency room or the doctor's office, some of them didn't have drug coverage or preventive care," Gonzalez said. About a third of those people will be eligible for subsidies, she said, if they come to the health exchange.

During the House hearing, Tavenner delivered the most direct mea culpa yet from the administration for the technical problems that have kept many Americans from signing up through

"I want to apologize to you that the website has not worked as well as it should," she told the committee.

The first senior official to publicly answer questions from lawmakers, Tavenner was pressed not only on what went wrong with the website, but also whether lawmakers can trust recent promises that things will be running efficiently by the end of November.

She declined to provide enrollment numbers, repeating nearly 20 times they will not be available until mid-November. But she did try to lower expectations of a strong initial sign-up. "We expect the initial number to be small," Tavenner said.

An internal memo obtained by the AP showed that the administration expected nearly 500,000 uninsured people to sign up for coverage in October, the program's first month. Committee chairman Camp told Tavenner that by his math, the administration appears headed for less than a fourth of that.

Outside contractors testified last week that there wasn't sufficient time to test the complex online enrollment system, which froze the day it was launched, Oct. 1.

The website is supposed to be the online portal to coverage for people who don't have health plans on the job. Its audience is not only uninsured Americans but those who already purchase coverage individually.

Under the law, middle-class people can qualify for tax credits to make private health insurance more affordable, while low-income people will be steered to Medicaid in states agreeing to expand that safety net program.

Associated Press writer Juliet Williams in Sacramento, Calif., also contributed to this report.

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JERRY ARIPEZ's picture

Repubs don't want you to have Insurance and now they are saying

Oh MY?
It’s good politics, I’m sure. It’s also breathtakingly cynical. Republicans have repeatedly endorsed proposals that would take insurance away from many more Americans—and leave them much, much worse off.

Start with the federal budgets crafted by Paul Ryan. You remember those, right? Those proposals passed through the House with unanimous Republican support and were, in 2012, a basis of the Republican presidential platform. Those budgets called for dramatic funding cuts to Medicaid. If Republicans had swept into power and enacted such changes, according to projections prepared by Urban Institute scholars and published by the Kaiser Family Foundation, between 14 and 20 million Medicaid recipients would lose their insurance. And that doesn't even include the people who are starting to get Medicaid coverage through Obamacare’s expansions of the program. That's another 10 to 17 million people.

The real issue here isn't simply Republican opportunism and hypocrisy—although, please, let’s not ignore that either. The real issue is about the true trade-offs of policy. Both sides offer them. With Obamacare, a small number of people lose their current insurance but they end up with alternative, typically stronger coverage. Under the plans Republicans have endorsed, a larger number of people would lose their current insurance, as people migrated to a more volatile and less secure marketplace. Under Obamacare, the number of Americans without health insurance at all will come down, eventually by 30 or 40 million. Under most of the Republican plans, the number of Americans without insurance would rise.


Policy cancellations

The whole point of having health insurance reform is to eliminate certain practices by the health insurance companies such as low catastrophic caps, pre-existing condition denial, overcharging women, unreasonably high copays, dropping people because they get sick etc. The plans that are dropping people are doing what they have always done. The ACA requires them to actually provide coverage so they either drop you or raise your premium. These people will easily find better coverage for less money with the new law.The coverage will include among other things mental health care. In the words of the NRA leader we have terrible mental health care in this country. One reason is that people will not pay for mental health care insurance because they don't think they will ever need it. And when they do they are unable to pay for it. We all pay for coverage we don't use. That's how insurance works. Seniors pay for maternity care and young people pay for knee and hip replacements. And sane people pay for mental health care.

JERRY ARIPEZ's picture

Bingo Claire,

The plans that are dropping people are doing what they have always done. Like that have for decades Claire and these repubs/tbaggers are just seeing a reality to what the insurance companies has done to peoples lives.

But only now has it been blasted as something totally new to these retardrepubs....companies do it at will, just like hiring and firing personnel....that has always been their Modes of Operation... .that was just another reason to bring about insurance protection for the AMERICAN PEOPLE.

Seems that those that live in a bubble like these repubs who on one hand say are willing to work this out and then again the 48 plus times and advertisements from the right to shut it all down and force it to collapse. Now there is the hypocrisy and lying that is really going on, just at the BS with the 600 million for the website whereas it is slightly over 200 mill....


The statement that it is not

The statement that it is not the administration's fault, but the insurers is another example of this administration's habit of shifting blame to others re: Obama's continuous blame of Bush for the problems he had. This health law may be an excellent idea, but the way it was written has been a problem since inception and we the American citizens are the ones being hurt. Mr. Reid, MS. Pelossi, and Mr. Obama were very secure in their actions that they were omnipotent in drafting this legislation, but never took the time to think of the effect it would have on the citizens of this country. This is a very significant piece of legislation that was never fully analyzed or read before voting on it. Is it not Ms Pelossi that told House members to vote for it and take care of the problems as they came up more or less. Maybe it is time to put a hold on this thing, admit mistakes were made (eating crow is never pleasant) and try to work out a civil dialog with ALL members of Congress participating in a constructive manner. It is almost impossible for the following to happen, but maybe Congress could work constructively on this and also banish the industry lobbyists from influencing their deliberations. It is a lot to expect for both parties to work together, but if they insist on continuing the folly that is going on in politics sooner or later we the voters will have had enough and either refuse to vote or we will refuse to vote for incumbents. No matter what side of the aisle we believe in, the actions of our politicians are not admirable or acceptable.

Honesty is not the best

Honesty is not the best policy, its the only policy our President should have with the people. He's a liar, he knew from the start what Obamcare did. Now even liberals are finding out as they are getting letters from their insurance companies informing them that they are having their policies cancelled. When the liberal news media call you out on a lie, you know its bad.


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