Insurance policy cancellations a new blow for Obama
WASHINGTON -- Move over, website woes. Lawmakers confronted the Obama administration Tuesday with a difficult new health-care problem -- a wave of cancellation notices hitting individuals and small businesses who buy their own insurance.
At the same time, the federal official closest to the website apologized for its dysfunction in new sign-ups and asserted that things are getting better by the day.
Medicare chief Marilyn Tavenner said it's not the administration but insurers who are responsible for cancellation letters now reaching many of the estimated 14 million people who buy individual policies. Officials said people who get cancellation notices will be able to find better replacement plans, in some cases for less.
The Associated Press, citing the National Association of Insurance Commissioners, reported in May that many carriers would opt to cancel policies this fall and issue new ones. Administratively, that was seen as easier than changing existing plans to comply with the new law, which mandates coverage of more services and provides better financial protection against catastrophic illnesses.
The administration had ample warning of the cancellations, so they could become another public relations debacle for President Obama's signature legislation. This problem goes to the credibility of one of the president's earliest promises about the health-care overhaul: You can keep your plan if you like it.
In the spring, state insurance commissioners started giving insurers the option of canceling existing individual plans for 2014, since the coverage required under Obama's law is more robust. Some states directed insurers to issue cancellations. Large employer plans that cover most workers and their families are unlikely to be affected.
The cancellation notices are now reaching policyholders, and they've been complaining to their lawmakers -- who grilled Tavenner on Tuesday.
"Based on what little information the administration has disclosed, it turns out that more people have received cancellation notices for their health-care plans this month than have enrolled in the [health-care website]," said Ways and Means Chairman Dave Camp, R-Mich. He cited a news report of 146,000 cancellations in his state alone.
Up and down the dais, lawmakers chimed in with stories of constituents who had received similar notices. Republicans offered examples of people being asked to pay more.
Democrats countered by citing constituents who had been able to find lower-cost coverage than they have now. Ranking Democrat Sander Levin of Michigan said one of his constituents has been paying $800 a month for a Blue Cross Blue Shield plan and found comparable coverage for $77, after tax credits that lower the premiums.
Still, Levin added, "This has become a matter of legitimate discussion."
It could take months to sort out the balance of individual winners and losers. There's not a central source of statistics on how many people have gotten cancellations. Even the number of people who buy insurance individually is disputed.
It isn't the Obama administration's fault, Tavenner said.
"In fact, the issuer has decided to change the plan," she said. "[They] didn't have to."
Obama's promise dates back to June of 2009, when Congress was starting to grapple with overhauling the health-care system to cover uninsured Americans.
"If you like your health-care plan, you'll be able to keep your health-care plan, period," the president said in remarks to the American Medical Association. "No one will take it away, no matter what."
Some immediately saw the promise as too broad to deliver on, given that health plans are constantly being changed by the employers that sponsor them or by insurers directly.
Nonetheless, Democrats in Congress devised a complicated scheme called "grandfathering," to try to make good on Obama's pledge. It shields plans from the law's requirements, provided the plans themselves change very little. Insurers say it has proven impractical.
The White House weighed in Tuesday, with spokesman Jay Carney saying the changes are part of a transition to better coverage.
"The good news," Carney said, "is that, for every one of these individuals who might have a plan that is almost by definition providing less than minimal benefits, . . . you are now being offered a variety of options, including options by the very insurer that covers you already, for new coverage."
Critics say that's like an airline forcibly upgrading you from economy to business class, and exposing you to a higher ticket price.
Tavenner delivered the most direct mea culpa yet from the administration for the technical problems that have kept many Americans from signing up through HealthCare.gov.
"I want to apologize to you that the website has not worked as well as it should," she told the committee.
The first senior official to publicly answer questions from lawmakers, Tavenner was pressed not only on what went wrong with the website but also if lawmakers can trust recent promises that things will be running efficiently by the end of November.
She declined to provide enrollment numbers, repeating nearly 20 times they will not be available until mid-November. However, she did try to lower expectations of a strong initial sign-up. "We expect the initial number to be small," Tavenner said.
An internal memo obtained by The Associated Press shows that the administration expected nearly 500,000 uninsured people to sign up for coverage in October, the program's first month. Committee chairman Camp told Tavenner that, by his math, the administration appears headed for less than a fourth of that.
Outside contractors testified last week that there wasn't sufficient time to test the complex online enrollment system, which froze the day it was launched, Oct. 1.
The website is supposed to be the online portal to coverage for people who don't have health plans through their job. Its audience is not only uninsured Americans but also those who already purchase coverage individually.
Under the law, middle-class Americans can qualify for tax credits to make private health insurance more affordable, while low-income citizens are to be steered to Medicaid in states agreeing to expand that safety-net program.