Insurance Blog

Finance Blogs » Insurance » The ‘hidden’ health cancellations

The ‘hidden’ health cancellations

By Jay MacDonald · Bankrate.com
Friday, January 3, 2014
Posted: 9 am ET

If nothing else, the public outrage over those individual health insurance policy cancellations last fall served to remind or enlighten consumers about health coverage: that coverage is offered on a one-year basis; renewal is not guaranteed; and insurers can indeed withdraw plans with timely notice.

While a widespread cancellation of policies by numerous carriers is as rare as a Chicago Cubs World Series victory, this one was both routine and widely predicted, given the new plan requirements of the Affordable Care Act. Simply put, most of the canceled plans no longer measure up.

But while pundits were busy portraying these cancellations in Hindenburg terms ("Oh, the humanity!"), a similar spate of "hidden" cancellations quietly continues in hospitals and insurance companies across the country that may have far greater impact on your health care than last fall's pruning.

Of big fish and little fish

Here's what's happening: The little fish (self-employed doctors and small clinics), increasingly squeezed by the cost to transition from fax machines to 21st century technology, are being swallowed by the big fish (large medical groups and hospitals) with the wherewithal to do so.

Health insurers are similarly trimming small providers from their networks and opting to contract with the larger fish, which can offer them better terms because they have the enhanced technology to meet the new quality standards and thus reap top dollar from government programs such as Medicare. And as Medicare goes, so goes America's health care system.

"Now, if Aetna contracts with the major hospital as their preferred provider, it comes with their physicians -- it's all a package now," explains Deborah Chollet, senior fellow at Mathematica Policy Research in Washington, D.C. "That's what the hospitals have wanted, because the hospitals can negotiate much better rates with that package than without."

How is this likely to impact you? Simple: your insurer might drop your doctor.

The doctor isn't in

Right now, the pruning is most visible in Medicare Advantage plans. According to Kaiser Family Foundation, health care giant United Healthcare served notice this fall that it's dropping 2,250 physicians in Connecticut, 2,100 in New York City, and entire prestigious practices, including the 1,200-physician Yale Medical Group and the 250-physician Moffitt Cancer Center in Tampa, Fla, the only National Cancer Institute-designated cancer treatment facility in Florida.

Where's all the screaming about these cancellations? So far, the American Medical Association and 42 medical specialty and patient advocacy groups have appealed to Medicare to intervene. But, as with those individual policy cancellations, an insurer is perfectly within its rights to prune doctors from its network with 30 days' notice to its members.

"The narrower choice of doctors is something that's going to shake out over the next couple of years, and it really has nothing to do with the Affordable Care Act," says Chollet. "It has to do with industry trends and reorganization within the industry."

As President Barack Obama famously said, "If you like your doctor, you can keep your doctor."

That is, if he or she is still in network.

Follow me on Twitter: @omnisaurus.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
11 Comments
Phil Gallagher
January 04, 2014 at 10:21 pm

Medical care is not a consumer good. Create a National Health plan. Ins Co make a fortune from people getting sick or injured.
Insane.

DABBY
January 04, 2014 at 9:38 pm

Sir, when is the last time you are aware that insurers cancel six million policies at once? You identified the problem yourself when you pointed out that the reason that policies were cancelled is because they didn't comply with the definitions set forth in THE AFFORDABLE CARE ACT. If you are incapable of making the connection, let me point it out to you. The Affordable Care Act is why the policies were cancelled.
The Affordable Care Act is why our President lied to us on purpose, period! The Affordable Care Act is why four million people who had insurance in 2013 no longer have it in 2014, period! The Affordable Care Act is why King Obama is laying the ground work for Queen Hillary to come to our rescue with a single payer system when the whole thing falls apart, period! Mr. President, I apologize for plagiarizing your word,"period!"

Mark Thernes
January 04, 2014 at 9:33 pm

The "mess" that is the Affordable Care Act is the consequence of focusing on the wrong question. Medicine is a value proposition among the insured, physicians and insurance providers. The debate focused exclusively on cost, with ACA supporters declaring that value did not and does not exist in healthcare!

Government is by necessity, a monopoly (and is it any surprise that ACA insurance options look like a monopoly 'solution'?). Government bureaucrats are incapable of understanding non-political value propositions as the rest of us understand them. True non-political value propositions are not part of how a government operates, it's not part of the "DNA" (and why governments everywhere are so very inept at running enterprises based on non-political value propositions).

Although ACA is unsustainable, much of the damage is done or already set in motion. Republicans cannot run on repeal of the ACA; we have come too far. The old system no longer exists and simple repeal would take away some things that a majority of Americans really like (such as insuring for pre-existing conditions, insurance portability, etc.). We can however; fix the worst components of the Act and find a better way forward. This will need to be the Republicans' message.

The interim elections are 10 months away and the new congress, such as it will be, is nearly a year from being sworn in. By that time, we will have implemented nearly all of ACA (the final reason why outright repeal of the ACA is not possible). If we get another Democrat as president (Hillary) the solution to the current unsustainable system will be a single payer system, which will be the worst of ACA on 'steroids'. Let's band together and insure that we do not go there!

HL
January 04, 2014 at 8:45 pm

Profits drive up costs. Hospitals and doctors all make money... Non profits all make money and all growing like monsters. The average worker pays for all health care in either case. City or state or country. 20% of all commerce. KNOW THAT!!! We might as well spread it around to more able to pay. 15% or so taken out for SS and med., should be taken out on all salaried income. Even playing field. LOL!!!

sluki
January 04, 2014 at 8:30 pm

Obamacare, what a JOKE!! If the politicians are exempted why is this good for us? low information voters please continue to vote for the democrats

EJ
January 04, 2014 at 7:07 pm

Is the dropping of doctors a back door approach to dropping people who use speciality doctors too much and therefore cost the insurance companies too much?

Jim Abbott
January 04, 2014 at 5:49 pm

I don't know what is causing it, but I just got a big surprise last month.
I thought I had satisfied my annual deductible last spring (my wife had a stroke...hospital+rehab+followup, etc)...and my annual total out of pocket by summer end.
Suddenly I was being charged deductible again. When I contacted my insurance I was informed that the doctors used by our local hospital are not in the network, so are subject to a separate deductible, as is our annual total out of pocket.
This is a total revelation to me, as my insurance headquarters is right here in town and so is our hospital.
So in effect, we have two insurance policies, one for in network and one for out of network providers.

Ken
January 04, 2014 at 5:20 pm

"The narrower choice of doctors is something that's going to shake out over the next couple of years, and it really has nothing to do with the Affordable Care Act," says Chollet. "It has to do with industry trends and reorganization within the industry."

Seriously?? "Nothing to do with the Affordable Care Act"? Of course it does. The "industry trends and reorganization' is directly related to this poorly drafted and over-bloated legislation. If only it were 'Affordable' there would be something to trumpet. Weren't plans supposed to save the average household $2,500 per year? Add that one to the whopping falsehoods already proven. Unfortunately what we've seen thus far is just the tip of the iceberg. Wait until the Employer mandate kicks in later this year.

John Wagner
January 04, 2014 at 4:49 pm

these plans that no longer 'measure up' are not lower quality plans, just plans that are not a federal one-size-fits-all plan. We obviously just have another media liberal writing this article!

Citizen Jones
January 04, 2014 at 4:33 pm

Missing from this article is the next wave of insurance cancellations: The small group market. Many of these plans were allowed to continue until plan anniversary in 2014 or in some cases, through 2014. But when they expire, they must all convert to the new "metal plans" i.e. bronze, silver, gold, that conform to the Affordable Care Act. There will be many more millions of notices sent out.

The plans being cancelled are NOT bare bones plans and in many cases, have premiums lower than the new metal plans, plus have lower deductible and out of pocket costs, particularly for out-of-network care. Out-of-network care in all new "metal plans" is getting clobbered.

What the plans getting cancelled may be missing are many services most people will never need or want, like in vitro fertilization, bariatric surgery, unlimited mental illness and substance abuse services and others that will put increased cost pressure on rates.

What this article got right was all this was known before the mud hit the fan. It took those millions of letters in the mail to wake folks up. Most are again now snoozing. Funny also how many Affordable Care Act provisions have been postponed until after 2014 mid-term elections.

At least if you like your spouse and children, you can still keep them.

Add a comment

(Comments may take 5-10 minutes to appear)