Kaiser Permanente’s decision to cancel the insurance policies of lifelong Democrats Lee Hammack and JoEllen Brothers generated a flood of interest yesterday. The couple, supporters of President Obama, may have to spend twice as much next year for a health insurance plan that has fewer benefits than the plan they have.
Kaiser explained to them, and to me, that their plan didn’t meet the requirements of the Affordable Care Act and therefore had to be canceled. But how could it be, many readers wondered, that the seemingly inferior plan offered for next year met the requirements of the act while the richer one they currently have does not?
I spent hours yesterday trying to figure that out and in the process came upon a related dispute between California’s insurance commissioner and the state’s new health insurance marketplace over these cancellations.
Here’s what I learned:
First, President Obama’s now-infamous pledge that those who liked their health plan could keep it applied only to people enrolled in those plans as of the day the Affordable Care Act was signed into law, March 23, 2010. That became known as the “grandfather” clause.
Hammack, a San Francisco architect, and Brothers have been members of Kaiser Permanente since 1995, but they’ve only been enrolled in this particular plan since January 2011. So they do not qualify for the grandfather protection. (Even if they did, Politifact has labeled the pledge “pants on fire.”)
Next, and more importantly, the benefits their plan offered didn’t fully comply with the Affordable Care Act.
It did not cover dependents in the manner set out by the law, and it did not cover pediatric dental and vision services, as well as “habilitative services,” which includes speech, occupational therapy and physical therapy.
“We did not cover these services in 2013,” Kaiser spokesman Chris Stenrud wrote in an email. “Pediatric dental and vision obviously do not apply to this couple, but it is one benefit package, regardless of age.”
These seemed like pretty minor points. Is this really enough to tank this plan? I asked Ken Wood, senior adviser for products, marketing and health plan relations for Covered California, the state’s health insurance marketplace.
“Any tiny point tanks the plan,” he told me last night. “If it was just the pediatric dental, that alone would say it’s a noncompliant plan.”
There was a bigger issue, too. The plan was medically underwritten, meaning that it carefully chose members based on their health status. The Affordable Care Act eliminates such screening and requires that insurers take all comers. “Because their current insurance pool is comprised of healthier people who use fewer medical services, the premium level needed to pay for those services is also less,” Stenrud wrote.
Put another way, Hammack and Brothers are casualties of an insurance system in transition. Until now, insurance companies could pick and choose which consumers to accept and reject. People were forced to pay different amounts based on their age and health status.
The new system created by the Affordable Care Act does not allow plans to turn away people with pre-existing conditions or charge them more. As a result, sick people previously denied coverage and healthy people who currently have insurance will pay the same.
That makes health care more affordable for many, but less affordable for some.
Read the whole story here.
