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Washington (CNN) — The White House has been tight-lipped about how many uninsured Americans have signed up for health care insurance under the Affordable Care Act, which has led to some concerns about whether enough people are enrolling in private health plans to make the economic model work.
Under the law, insurance companies are required to cover anyone. But in order to make that economically feasible, everyone has to buy insurance.
The White House has set a goal of enrolling 7 million people in private insurance plans through the new health insurance exchanges by March 31, 2014, the end of the glitch-plagued open enrollment period that started October 1.
But it has been tight-lipped so far about how many people have actually enrolled in private insurance plans — those who have both applied and paid the premiums in advance.
Officials announced Thursday that 700,000 people have applied for insurance plans in both the 36 states that are using a federally run health care exchange and the 14 states running their own exchanges.
But don’t apply that 700,000 application figure to the 7 million enrollment goal. For starters, there’s no guarantee that all 700,000 will ultimately enroll in a health insurance plan.
And those 700,000 applications include Medicaid enrollments.
Medicaid programs are the public health insurance programs run by states to provide low-income people with health insurance.
As the law was originally envisioned, more than half of the uninsured people in the United States — 24 million or so, according to the Kaiser Family Foundation — who would be getting insurance through Obamacare would have been getting Medicaid. Anyone who makes less than 138% of the poverty level — about $27,000 for a family of four — isn’t eligible for federal subsidies to buy insurance, so Medicaid is effectively their only option.
So it’s not necessarily a bad thing if more than half of the people getting insurance under Obamacare so far are getting Medicaid. But in many of the states operating their own exchanges, new Medicaid enrollees account for more than half of the people who have obtained insurance under Obamacare since October 1.
Should it be alarming that so many of these 700,000 new applications are people trying to get Medicaid and not private insurance?
Not yet, said Matt Salo, executive director of the National Association of Medicaid Directors.
“There’s nothing in what we’ve seen to suggest anything like that,” he said. “Whether you’re able to be eligible for Medicaid or not is totally dependent on your income.”
But he did admit “Some of the numbers we’ve seen, preliminary, early numbers, do seem a little out of whack.”
But he said there’s a reason for that.
“In these small handful of states, they’re aggressively targeting people they think might be eligible for Medicaid,” Salo said.
Salo pointed to people who the states already know are on food stamps receiving some other kind of state or locally funded health program.
“You know who they are, you know what their income is, you know they’re OK accepting government benefits. If you go after these guys, there should be no surprise that these people are being enrolled.”
Also, in some states, Medicaid coverage starts immediately, meaning there may be more of an incentive to enroll early because you get coverage sooner than on the private market where no matter when you enroll in the first two and a half months coverage still starts on January 1.
In Arkansas they’ve insured more than 62,000 people in Medicaid since October 1. But in a novel twist they’re doing it by using Medicaid dollars to buy people private insurance on the exchanges.
And Oregon has been approved to use food stamps and other metrics as a prequalifier for Medicaid enrollment. So the state sent letters to uninsured welfare recipients that detailed simple steps to enroll in Medicaid — i.e. just sign a form and mail it back or call a hotline. This has resulted in tens of thousands of enrollees. But Oregon also has yet to allow online registration for private health insurance. It’s the one state that elected to fix the glitches in its website before going live.
It may very well be that not enough people — particularly the young and the healthy people who are needed to pay premiums to offset the benefits going out to older and less healthy — are signing up for health insurance on the exchanges.
But with so little information from the government, it is too early to tell.
Thousands of Californians are discovering what Obamacare will cost them — and many don’t like what they see.
These middle-class consumers are staring at hefty increases on their insurance bills as the overhaul remakes the healthcare market. Their rates are rising in large part to help offset the higher costs of covering sicker, poorer people who have been shut out of the system for years.
Although recent criticism of the healthcare law has focused on website glitches and early enrollment snags, experts say sharp price increases for individual policies have the greatest potential to erode public support for President Obama‘s signature legislation.
“This is when the actual sticker shock comes into play for people,” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “There are winners and losers under the Affordable Care Act.”
Fullerton resident Jennifer Harris thought she had a great deal, paying $98 a month for an individual plan through Health Net Inc. She got a rude surprise this month when the company said it would cancel her policy at the end of this year. Her current plan does not conform with the new federal rules, which require more generous levels of coverage.
Now Harris, a self-employed lawyer, must shop for replacement insurance. The cheapest plan she has found will cost her $238 a month. She and her husband don’t qualify for federal premium subsidies because they earn too much money, about $80,000 a year combined.
“It doesn’t seem right to make the middle class pay so much more in order to give health insurance to everybody else,” said Harris, who is three months pregnant. “This increase is simply not affordable.”
On balance, many Americans will benefit from the healthcare expansion. They are guaranteed coverage regardless of their medical history. And lower-income families will gain access to comprehensive coverage at little or no cost.
The federal government picks up much of the tab through an expansion of Medicaid and subsidies to people earning up to four times the federal poverty level. That’s up to $46,000 for an individual or $94,000 for a family of four.
But 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 insurance.
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.
“She said, ‘I was all for Obamacare until I found out I was paying for it,'” Kehaly said.
Nearly 2 million Californians have individual insurance, and several hundred thousand of them are losing their health plans in a matter of weeks.
Blue Shield of California sent termination letters to 119,000 customers last month whose plans don’t meet the new federal requirements. About two-thirds of those people will experience a rate increase from switching to a new health plan, according to the company.
HMO giant Kaiser Permanente is canceling coverage for about half of its individual customers, or 160,000 people, and offering to automatically enroll them in the most comparable health plan available.
The 16 million Californians who get health insurance through their employers aren’t affected. Neither are individuals who have “grandfathered” policies bought before March 2010, when the healthcare law was enacted. It’s estimated that about half of policyholders in the individual market have those older plans.
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.
Peter Lee, executive director of Covered California, said the state and insurers agreed that clearing the decks by Jan. 1 was best for consumers in the long run despite the initial disruption. Lee has heard the complaints — even from his sister-in-law, who recently groused about her 50% rate increase.
“People could have kept their cheaper, bad coverage, and those people wouldn’t have been part of the common risk pool,” Lee said. “We are better off all being in this together. We are transforming the individual market and making it better.”
Lee said consumers need to consider all their options. They don’t have to stick with their current company, and higher premiums are only part of the cost equation. Lee said some of these rate hikes will be partially offset by smaller deductibles and lower limits on out-of-pocket medical expenses in the new plans.
Still, many are frustrated at being forced to give up the plans they have now. They frequently cite assurances given by Obama that Americans could hold on to their health insurance despite the massive overhaul.
“All we’ve been hearing the last three years is if you like your policy you can keep it,” said Deborah Cavallaro, a real estate agent in Westchester. “I’m infuriated because I was lied to.”
Supporters of the healthcare law say Obama was referring to people who are insured through their employers or through government programs such as Medicare. Still, they acknowledge the confusion and anger from individual policyholders who are being forced to change.
Cavallaro received her cancellation notice from Anthem Blue Cross this month. The company said a comparable Bronze plan would cost her 65% more, or $484 a month. She doubts she’ll qualify for much in premium subsidies, if any. Regardless, she resents losing the ability to pick and choose the benefits she wants to pay for.
“I just won’t have health insurance because I can’t pay this increase,” she said.
Most Americans are required to have health coverage starting next year or pay a fine of $95 per adult or 1% of their income, whichever is greater. The fines increase over time.
A number of factors are driving up rates. In a report this year, consultants hired by the state said the influx of sicker patients as a result of guaranteed coverage was the biggest single reason for higher premiums. Bob Cosway, a principal and consulting actuary at Milliman Inc. in San Diego, estimated that the average individual premium in 2014 will rise 27% because of that difference alone.
Individual policies must also cover a higher percentage of overall medical costs and include 10 “essential health benefits,” such as prescription drugs and mental health services. The aim is to fill gaps in coverage and provide consumers more peace of mind. But those expanded benefits have to be paid for with higher premiums.
The federal law also adjusts how rates are set by age, a change that gives older consumers a break and shifts more costs to younger people. Rates by age can vary by only 3 to 1 starting next year as opposed to 6 to 1 in some cases now in California. People in their 20s just starting their careers may earn so little they qualify for subsidies. But that might not be the case for consumers who are slightly older and earning more.
“It has the effect of benefiting people in their 50s and 60s and shifting costs to people in their 20s and 30s,” said Patrick Johnston, president of the California Assn. of Health Plans. “Benefits are being increased for all, but it’s not government subsidies for all. Some will pay more.”
Rates would be going up regardless of changes from the healthcare expansion. The average individual premium will climb 9% next year because of rising healthcare costs and increases in medical provider reimbursement, according to Milliman’s estimates.
Some consumer groups have questioned whether insurers are inflating their rates under the guise of the healthcare law changes.
“We believe the prices are higher than they should be,” said Jamie Court, president of Consumer Watchdog, a Santa Monica advocacy group. “This is giving a bad name to the Affordable Care Act.”
State regulators checked the insurance companies’ math and underlying cost projections for next year, but they don’t have the authority to deny increases. Under federal rules, insurers can be ordered to issue rebates if they don’t spend a minimum amount of every premium dollar on customers’ medical care.
“The rates aren’t going up because insurance companies are pocketing more money,” Lee said. “That is what it takes to pay the claims and deliver the healthcare.”
Javier Lopez, 38 and a self-employed aerospace engineer in Huntington Beach, pays about $750 a month for an Anthem Blue Cross plan for his family of four. His premiums may rise nearly 20% next year for a new policy because his current plan is being phased out.
Lopez says he’s willing to absorb that one-year jump if it means the government can rein in future rate hikes.
“I’m hoping with this reform,” Lopez said, “we won’t see big increases year after year.”
President Barack Obama walks out to deliver remarks on the Affordable Care Act in the Rose Garden of the White House in Washington on Oct. 1, 2013.
By Lisa Myers and Hannah Rappleye
President Obama repeatedly assured Americans that after the Affordable Care Act became law, people who liked their health insurance would be able to keep it. But millions of Americans are getting or are about to get cancellation letters for their health insurance under Obamacare, say experts, and the Obama administration has known that for at least three years.
This story has been republished here
Four sources deeply involved in the Affordable Care Act tell NBC NEWS that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.”
None of this should come as a shock to the Obama administration. The law states that policies in effect as of March 23, 2010 will be “grandfathered,” meaning consumers can keep those policies even though they don’t meet requirements of the new health care law. But the Department of Health and Human Services then wrote regulations that narrowed that provision, by saying that if any part of a policy was significantly changed since that date — the deductible, co-pay, or benefits, for example — the policy would not be grandfathered.
Buried in Obamacare regulations from July 2010 is an estimate that because of normal turnover in the individual insurance market, “40 to 67 percent” of customers will not be able to keep their policy. And because many policies will have been changed since the key date, “the percentage of individual market policies losing grandfather status in a given year exceeds the 40 to 67 percent range.”
That means the administration knew that more than 40 to 67 percent of those in the individual market would not be able to keep their plans, even if they liked them.
Yet President Obama, who had promised in 2009, “if you like your health plan, you will be able to keep your health plan,” was still saying in 2012, “If [you] already have health insurance, you will keep your health insurance.”
“This says that when they made the promise, they knew half the people in this market outright couldn’t keep what they had and then they wrote the rules so that others couldn’t make it either,” said Robert Laszewski, of Health Policy and Strategy Associates, a consultant who works for health industry firms. Laszewski estimates that 80 percent of those in the individual market will not be able to keep their current policies and will have to buy insurance that meets requirements of the new law, which generally requires a richer package of benefits than most policies today.
The White House does not dispute that many in the individual market will lose their current coverage, but argues they will be offered better coverage in its place, and that many will get tax subsidies that would offset any increased costs.
“One of the main goals of the law is to ensure that people have insurance they can rely on – that doesn’t discriminate or charge more based on pre-existing conditions. The consumers who are getting notices are in plans that do not provide all these protections – but in the vast majority of cases, those same insurers will automatically shift their enrollees to a plan that provides new consumer protections and, for nearly half of individual market enrollees, discounts through premium tax credits,” said White House spokesperson Jessica Santillo.
“Nothing in the Affordable Care Act forces people out of their health plans: The law allows plans that covered people at the time the law was enacted to continue to offer that same coverage to the same enrollees – nothing has changed and that coverage can continue into 2014,” she said.
Individual insurance plans with low premiums often lack basic benefits, such as prescription drug coverage, or carry high deductibles and out-of-pocket costs. The Affordable Care Act requires all companies to offer more benefits, such as mental health care, and also bars companies from denying coverage for preexisting conditions.
Today, White House spokesman Jay Carney was asked about the president’s promise that consumers would be able to keep their health care. “What the president said and what everybody said all along is that there are going to be changes brought about by the Affordable Care Act to create minimum standards of coverage, minimum services that every insurance plan has to provide,” Carney said. “So it’s true that there are existing healthcare plans on the individual market that don’t meet those minimum standards and therefore do not qualify for the Affordable Care Act.”
Other experts said that most consumers in the individual market will not be able to keep their policies. Nancy Thompson, senior vice president of CBIZ Benefits, which helps companies manage their employee benefits, says numbers in this market are hard to pin down, but that data from states and carriers suggests “anywhere from 50 to 75 percent” of individual policy holders will get cancellation letters. Kansas Insurance Commissioner Sandy Praeger, who chairs the health committee of the National Association of Insurance Commissioners, says that estimate is “probably about right.” She added that a few states are asking insurance companies to cancel and replace policies, rather than just amend them, to avoid confusion.
A spokesman for America’s Health Plans says there are no precise numbers on how many will receive cancellations letters or get notices that their current policies don’t meet ACA standards. In both cases, consumers will not be able to keep their current coverage.
Those getting the cancellation letters are often shocked and unhappy.
George Schwab, 62, of North Carolina, said he was “perfectly happy” with his plan from Blue Cross Blue Shield, which also insured his wife for a $228 monthly premium. But this past September, he was surprised to receive a letter saying his policy was no longer available. The “comparable” plan the insurance company offered him carried a $1,208 monthly premium and a $5,500 deductible.
And the best option he’s found on the exchange so far offered a 415 percent jump in premium, to $948 a month.
“The deductible is less,” he said, “But the plan doesn’t meet my needs. Its unaffordable.”
“I’m sitting here looking at this, thinking we ought to just pay the fine and just get insurance when we’re sick,” Schwab added. “Everybody’s worried about whether the website works or not, but that’s fixable. That’s just the tip of the iceberg. This stuff isn’t fixable.”
Heather Goldwater, 38, of South Carolina, is raising a new baby while running her own PR firm. She said she received a letter last July from Cigna, her insurance company, that said the company would no longer offer her individual plan, and promised to send a letter by October offering a comparable option. So far, she hasn’t received anything.
“I’m completely overwhelmed with a six-month-old and a business,” said Goldwater. “The last thing I can do is spend hours poring over a website that isn’t working, trying to wrap my head around this entire health care overhaul.”
Goldwater said she supports the new law and is grateful for provisions helping folks like her with pre-existing conditions, but she worries she won’t be able to afford the new insurance, which is expected to cost more because it has more benefits. “I’m jealous of people who have really good health insurance,” she said. “It’s people like me who are stuck in the middle who are going to get screwed.”
Richard Helgren, a Lansing, Mich., retiree, said he was “irate” when he received a letter informing him that his wife Amy’s $559 a month health plan was being changed because of the law. The plan the insurer offered raised his deductible from $0 to $2,500, and the company gave him 17 days to decide.
The higher costs spooked him and his wife, who have painstakingly planned for their retirement years. “Every dollar we didn’t plan for erodes our standard of living,” Helgren said.
Ulltimately, though Helgren opted not to shop through the ACA exchanges, he was able to apply for a good plan with a slightly lower premium through an insurance agent.
He said he never believed President Obama’s promise that people would be able to keep their current plans.
“I heard him only about a thousand times,” he said. “I didn’t believe him when he said it though because there was just no way that was going to happen. They wrote the regulations so strictly that none of the old polices can grandfather.”
For months, Laszewski has warned that some consumers will face sticker shock. He recently got his own notice that he and his wife cannot keep their current policy, which he described as one of the best, so-called “Cadillac” plans offered for 2013. Now, he said, the best comparable plan he found for 2014 has a smaller doctor network, larger out-of-pocket costs, and a 66 percent premium increase.
“Mr. President, I like the coverage I have,” Laszweski said. “It is the best health insurance policy you can buy.”
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Dick Durbin, Chuck Schumer, Dianne Feinstein (Credit: Jeff Malet, maletphoto.com/Reuters/Hyungwon Kang)
After a government shutdown that did massive damage to the Republican Party’s image, many Democrats were optimistic that the upcoming elections in 2014 could be theirs for the taking.
Then came Healthcare.gov’s early malfunctions and the rising tide of cancellation notices sent by insurance companies to those in the individual market.
Now, reports the New York Times, Democrats are worried that Obamacare’s dysfunctions and disruptions will squander the gains made during the government shutdown. They’re so worried, in fact, that they called White House Chief of Staff Dennis McDonough on Thursday for a special, closed-door meeting. As they filtered out of the room following the meeting’s conclusion, Democrats’ fears appeared to be far from assuaged.
“People are anxious,” Illinois’ Sen. Durbin, the Senate’s No. 2 Democrat, told the New York Times.
“I don’t think there’s confidence by anyone in the room,” added Oregon’s Sen. Merkley. “This is more a show-me moment. We were all confident that the system was going to be up and operating on Oct. 1. And now we’re not confident until it’s real.”
President Obama has empowered the IRS to enforce this law and oversee every Americanâ€™s health insurance decisions.Â It is deeply concerning that all Americans will now be asked to turn over the private health insurance information about their children and families to a disgraced organization that has admitted to abusing the power which was entrusted to them.Â This law will require thousands of new IRS agents and billions of dollars to enforce the law.
Elements of the law IRS will enforce:
- Individual Mandate: Starting in 2014, individuals will be required to carry health insurance through one of several means. Individuals will certify their health insurance coverage via their tax return. For any individual who does not meet the requirement, the individual will pay a tax penalty to the IRS.
- Employer Mandate: If an employer has more than 50 employees and fails to provide insurance to their employees, the employer must pay a $2,000 per employee fine to the IRS.
- Health Insurance Exchange Information: As part of the health insurance exchange application process, individualâ€™s data will be cross-referenced with IRS records to determine income eligibility. Additionally, if the individual is employed, the IRS will be responsible for cross-referencing the employeeâ€™s W-2 income from their employer to determine if the insurance is â€œaffordable.â€
- Â Responsible for collecting over 21 different taxes: PPACA included 21 different tax hikes such as the Medical Device Tax and the new Medicare tax on Unearned Income. The IRS will be responsible for collecting all of these new tax provisions totaling more than $500 billion.
“I think the need for information is pretty apolitical,” Lisa Zamosky, a WebMD health policy expert, told USA Today regarding the need for Americans to understand the particulars of the Affordable Care Act’s insurance exchanges that will launch on October 1. “You can love it, you can hate it. It’s the law. It’s happening.”
It is a need that the Obama Administration understands, but has had problems delivering. According to Health and Human Services secretary Kathleen Sebelius, the department lost approximately $15.5 billion from its budget due to the mandatory budget cuts that were implemented on March 1, and the loss of funds has forced prioritization. However, travel by department officials to promote the health care reform is a key priority. After all, the success of Obamacare depends on the success of the insurance exchanges, and for them to be viable, people must enroll.
In order to better help Americans better understand the exchanges, the government has given the exchange website — www.healthcare.gov — a face lift, adding a new webpage, training videos and infographics on Monday. “Everywhere I go, I meet people who are excited about the marketplaces and hungry for information,” Sebelius told USA Today, following the announcement. “Hungry” may not exactly be the correct term, especially in all parts of the United States; “deficient” in knowledge might be more accurate.
The Patient Protection and Affordable Care Act (PPACA), commonly called Obamacare or the Affordable Care Act (ACA), is a United States federal statute signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act, it represents the most significant government expansion and regulatory overhaul of the country’s healthcare system since the passage of Medicare and Medicaid in 1965.
The ACA aims to increase the quality, affordability, and rate of health insurance coverage for Americans, and reduce the costs of health care for individuals and the government. It provides a number of mechanisms—including mandates, subsidies, and insurance exchanges—to increase coverage and affordability. The law also requires insurance companies to cover all applicants within new minimum standards and offer the same rates regardless of pre-existing conditions or sex. Additional reforms aim to reduce costs and improve healthcare outcomes by shifting the system towards quality over quantity through increased competition, regulations, and incentives to streamline the delivery of health care. The Congressional Budget Office projected that the ACA will lower both future deficits and Medicare spending.
On June 28, 2012, the United States Supreme Court upheld the constitutionality of most of the ACA in the case National Federation of Independent Business v. Sebelius. However, the Court held that states cannot be forced to participate in the ACA’s Medicaid expansion under penalty of losing their current Medicaid funding.
For More Information Please visit: Patient Protection and Affordable Care Act
SACRAMENTO, Calif. — A second health insurer notified state regulators Tuesday that it will stop selling individual policies in California.
UnitedHealthcare announced it will no longer offer individual insurance plans after the end of the year. It will focus instead on its core business of group plans for large and small employers.
“Our individual business in California has always been relatively small and we currently serve less than 8,000 individual customers across the state,” the company said in a statement. “Over the years, it has become more difficult to administer these plans in a cost-effective way for our members in California.”
The announcement comes two weeks after Aetna Inc. said it also plans to exit California’s individual insurance market. Both insurers avoided participating in the state exchange that is being established as part of the Affordable Care Act.
State Insurance Commissioner Dave Jones says the departure of UnitedHealthcare and Aetna is bad news for consumers.
“While both UnitedHealthcare and Aetna have a very small share of California’s individual health insurance market, their departure means less choice, less competition, and more market consolidation by the remaining big three health insurers – Anthem Blue Cross, Blue Shield of California, and Kaiser – which means an increased likelihood of even higher prices from those health insurers downstream,” Jones, a Democrat, said in a statement.
According to 2011 figures compiled by the California HealthCare Foundation, Anthem Blue Cross, Blue Shield and Kaiser have 87 percent of the individual market.
Starting Oct. 1, those seeking to buy their own health insurance will be directed to Covered California, the state’s new exchange, where 13 insurance carriers will sell individual policies.
Aetna and UnitedHealthcare chose not to participate in the exchange.