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Obamacare bends on ‘junk’ plans

By Jay MacDonald · Bankrate.com
Thursday, March 6, 2014
Posted: 11 am ET

Remember all the sturm und drang last fall when, despite President Barack Obama's assurances to the contrary, thousands of Americans who were perfectly happy with their health insurance received word that their policies were being canceled?

Guess what? Those policies, once labeled "junk insurance" by the feds, are back -- sort of.

Outdated plans renewable into 2017

In a series of final health reform rulings released Wednesday, the Obama administration announced it will allow insurers to continue to offer policies that don't comply with the Affordable Care Act for an additional two years. Under the new rule, consumers could renew their existing policy as late as Oct. 1, 2016 and keep their plan well into 2017.

The extension also applies to those insured under old, small group plans offered by companies with 50 or fewer employees. Insurers are not allowed to enroll new customers in the subpar plans, however.

Health officials also extended next year's open enrollment period on the state health exchanges by a month. It will now run from Nov. 15, 2014 to Feb. 15, 2015.

More damage repair

While the administration says only about 1.5 million Americans actually received nonrenewal notices, the timing of the cancellations, coinciding as they did with the rocky launch of the Obamacare online exchanges, made for a Mylanta moment for Obama.

By mid-November, the administration retrenched and allowed state insurance commissioners to give insurers the option of continuing their subpar policies in 2014. Most of those policies fall short of Obamacare standards by not offering the required benefits, such as maternity care or out-of-pocket spending limits. Commonwealth Fund estimates that at least 28 states took the administration up on that offer.

The political blogosphere was quick to characterize the impending two-year extension of subpar policies as a White House concession to this fall's midterm elections. As Capitol Hill health consultant John Gorman told Bloomberg, "It's clearly been a damaging gaffe that the president doesn't want to hang around the neck of fellow Democrats this fall."

A potentially destabilizing option

The likely blowback, of course, is that the young consumers who own those subpar plans in disproportionate numbers may now take the money and run away from the more costly, more robust products on the exchanges, which dearly need their business. A recent Kaiser Family Foundation survey finds that 56 percent of the uninsured hold an unfavorable opinion of health care reform, with just 22 percent giving Obamacare a favorable rating.

The young and healthy are needed to offset the cost to insure older and sicker Americans on the exchange, now that insurers can no longer deny coverage or charge more based on gender or pre-existing health conditions, and must include maternity care and free preventive health screening.

Convenience and calculation

My take? Mixed.

On the one hand, as one of the estimated 5 percent of Americans affected by this adjustment, I'm pleased to have the option to keep the plan I've had and have rarely used for a decade rather than spend considerably more money on a comparable exchange plan I probably won't use either.

That said, the timing and length of the extension strikes me as politically expedient. Forget midterm elections -- this will guarantee there won't be widespread policy cancellations again until well after the next presidential inauguration.

Follow me on Twitter: @omnisaurus.

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4 Comments
Rich
March 09, 2014 at 7:26 pm

Stop calling my BCBS IL Plan "outdated", "junk", "subpar", etc.. I have a GREAT plan that is a HELL of a lot more affordable than the Obama piece of junk equivalent. I will miss my plan, it lower premiums, lower deductibles and lower out of pocket once it is ripped away from me...I'll probably have to file for BK once my premiums rise to $1202 per month (70% increase) and my out of pocket more than doubles...

Vince
March 07, 2014 at 11:04 am

Bait and Switch by Anthem,

What Anthem and others have failed to disclose is that for individual plans only doctors already in Anthem's PPO pre-2014 are required to reapply for the Anthem Path PPO to treat full pay individual policy holders. The predatory practice by Anthem is the reduction of doctor fee reimbursement to well below Medicare and group plan rates.

In effect, full paying individual policy holders will have few physicians options and are treated as those receiving subsidized care. This won't fly for long. Very manipulative for Anthem and unfair to docs and patients alike

Bill
March 06, 2014 at 2:02 pm

Most people don't know that it is possible to get out of Obamacare entirely. Fox News carried an article this week about that very thing. It is possible to Opt out of Obamacare without penalties. That is done by joining a faith based medical sharing ministry. There is only one that does not require the member to be a Christian. That ministry is Liberty HealthShare. You can read all about them on their website at ACAout dot com. It is a good alternative for some people. It is certainly more affordable than traditional health insurance.

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