Wednesday, November 20, 2013

It's OK some health plans got cancelled

It's called health care reform for a reason, folks:  

Senator Mary Landrieu's "Keeping the Affordable Care Act Promise Act" would require insurance companies to keep offering people the plans they have right now as long as they keep paying their premiums. It's the kind of poll-tested idea that's good politics, and horrible, horrible policy. That's because it's a good thing if some people lose their plans. That's how reform should work, the White House's false promises and hopelessly bungled roll-out, notwithstanding.

The individual insurance market doesn't work. You can't get insurance if you are sick, and don't get much insurance if you become sick. In other words, insurers won't sell policies to people with preexisting conditions, and sell insufficient policies to healthy people. As Jonathan Cohn explains, these insufficient policies often don't cover things like prescription drugs and won't cover high out-of-pocket expenses. And if your plan wasn't insufficient, insurance companies would look for excuses to cancel it after-the-fact if you did become seriously ill—what's known as "rescission."

Obamacare tries to fix these problems with the individual market—and the inescapable logic of that is some people will end up paying more than before. Here's why in three steps. First, Obamacare makes insurers offer everyone the same policies at the same prices regardless of preexisting conditions (though not age). But bare bones coverage with high out-of-pockets, and even lifetime limits, isn't much use if you're sick. So, second, it sets minimum benefit levels. But what about healthy people who already have individual policies that don't meet these levels? Well, if they had those plans before Obamacare was passed in March 2010, and those plans haven't changed at all since, they can keep them. Otherwise, they can't. [That's an oversimplification of the ACA's grandfathering rules -- J.] They have to buy conforming plans that are almost certainly more expensive. Because, third, Obamacare needs healthy people paying for more than just catastrophic (and even junk) insurance to help pay for all the sick people now getting coverage. In other words, Obamacare needs health insurance to

By Matthew O'Brien
November 14, 2013 | Atlantic

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