Will Your Health Insurance Be Cancelled?

By Steve Barlotta, CPA

“If you like your insurance plan, you will keep it. No one will be able to take that away from you.”

This was the promise that President Obama gave to the American people in 2009. In 2012, he continued his rhetoric, “If [you] already have health insurance, you will keep your health insurance”. Despite these assurances from the President, millions of Americans have either received or will receive cancellation letters from their health insurance providers explaining that their existing policies are not in compliance with the Affordable Care Act.

The majority of these cancellations will be to the millions of consumers who purchase their health insurance individually, and now it appears the same fate will befall small employer health insurance plans. How do I know this? Well, last month I received a cancellation letter from my provider, a major health insurance carrier, explaining that my existing small employer plan will no longer be offered because it does not meet the requirements dictated under Obamacare. According to an NBC News report, as much as 50 to 80 percent of the 14 million consumers who buy their insurance individually will receive cancellation letters over the next year. Further, the Obama administration knew for three years that the majority of the individual policies would be terminated. Deep in the Affordable Care Act regulations from July 2010 is an estimate that 40 to 67 percent of the consumers in the individual insurance market would be unable to keep their policies. The ability for consumers to keep their existing insurance was an extremely important element of Obamacare and one of the keys to its passage. For this administration to tell the American people as late as 2012 that they can keep their existing health insurance plans when they knew otherwise, is disingenuous at best.

So why are these health insurance policies being cancelled? Essentially, Obamacare forces insurance companies to eliminate any of their plans that don’t meet the Affordable Care Act’s ten minimum standards. Some of these requirements are maternity care, pediatric vision and pediatric dental benefits. So, individuals will have no choice but to be moved into these one-size-fits-all insurance plans that forces them to pay for coverage they don’t want or need. Why would a retired couple from Florida want a plan that covers maternity care and pediatric benefits? And why should they be forced to pay for these benefits? I know my existing health insurance plan is not perfect, but at least I had the flexibility to pick the plan that best fit my family’s health needs and our budget. Now we are faced with the prospect, along with millions of Americans, of losing our doctors. I specifically remembered the President telling us in 2009, “if you like your doctor, you will be able to keep your doctor, period”. As I mentioned in a previous article, my biggest complaint with Obamacare is that it does not give the American people the freedom to spend their health care dollars where they choose.

It is also becoming apparent that many of the individuals whose policies were cancelled are facing significant premium increases either from alternative plans offered by their insurance companies or comparable plans on the health care exchange. A recent article in the LA Times states that “middle-income consumers face an estimated 30% rate increase, on average, in California due to several factors tied to the healthcare law”. For many middle-class Americans, the increase in premiums will be too high and they may well opt out of any health insurance plan and pay a fine instead. And it’s difficult to argue that the premium increases being absorbed by the middle-class consumer isn’t tantamount to a tax increase to help fund Obamacare.

Sources: Obama Administration Knew Millions Could Not Keep Their Health Insurance, NBC News, Lisa Meyers & Hannah Rappleye, 10/29/13.

Some Health Insurance Gets Pricier as Obamacare Rolls Out, Los Angeles
Times, Chad Terhune, 10/26/13.