As 2 million or more Americans see their health insurance policies cancelled due to incompatibilities with Obamacare standards, Michigan insurers are scrambling to explain the upheaval.
The wave of cancellations has hit some of the 14 million people who buy their insurance individually, rather than receiving coverage through their employer or a government program, such as Medicare.
Critics say the surprise moves by insurers demonstrate that President Obama was untruthful when he repeatedly said in the past that, under the Affordable Care Act, those who like their insurance can keep it.
Defenders of the ACA counter that many of the cancellations involve junk policies that, in the case of a serious or chronic illness, really didnt provide much insurance at all.
It was not explained to the individual market as robustly as possible, said Dave Waymire, a spokesman for the Michigan Association of Health Plans, which represents virtually every health care insurer in the state except for Blue Cross/Blue Shield.
Its a perfect storm of a lack of information and an excess of misinformation.
News stories abound of angry policy holders who received a cancellation notice and, because they are now uninsured, have been steered to the glitch-plagued online Obamacare exchanges. In many cases, these victims of cancellation decry their options, claiming that they will pay considerably more in monthly premiums or in yearly deductibles.
Industry officials say many of those anecdotes are off the mark. In addition, a large number of individual-market customers have not adequately calculated the federal tax subsidies they will receive on the exchange marketplaces.
But critics say they are especially incensed at paying for unwanted services, such as mandated maternity care for couples who are far beyond their child-bearing years.
The industry consensus that seems to have emerged is that 20 to 25 percent of those in the individual market will pay significantly more in out-of-pocket expenses, 20 to 25 percent will pay considerably less, and those in the vast middle will experience relatively mild but mixed outcomes.
At Blue Cross/Blue Shield of Michigan, officials insist they have cancelled no customers policies. None of the BCBS policies previously offered to 140,000 individual-market customers meet the new Obamacare standards for coverage. But the company offers continuity of care through redesigned BCBS plans, created after many months of crunching numbers related to actuarial projections, underwriting protocol and IT expenses.
After the internal upheaval, the company produced a new set of policies that, in many cases, are more expensive but offer benefits that cover many more medical issues, according to Andy Hetzel, the insurers vice president of communications.
We will transition our members to new plans that are compliant with the ACA requirements, Hetzel said. The ACA has changed what health insurance is. The benefits are much richer.
For those who complain that they dont want a one size fits all policy mandated by Washington, Grand Rapids-based Priority Health has stepped forward to take advantage of a grandfather clause within Obamacare.
Priority Health will maintain current costs for its 21,000 individual policyholders through the end of 2014. Those who have been cancelled by their insurer can sign on with Priority and receive a 13-month freeze in their rates as new customers.
The Priority approach has paid off, according to Don Whitford, a company vice president. The insurer is receiving hundreds of inquiries per day about their offer and Whitford estimates that they will pick up an additional 15 to 20 percent in new customers.
We want to give people ample time to make sure they understand the implications of the Affordable Care Act and that theyve had the opportunity to study their options, Whitford said.
Those who buy into this pause in the ACA have 21 Priority Health policies to choose from on the Michigan exchange.
Among the 10 essential benefits mandated by the ACA, Waymire said the addition of mental health care may not push up costs for insurance companies but the beefed up coverage for prescription medicines could.
Another major factor is that the ACA mandates yearly and lifetime caps on coverage, which proved financially disastrous in the past if a family member suffered a lengthy bout with cancer or a major injury.
Traditionally, many individual-market shoppers are small business owners in the retail or restaurant sectors who offer no health benefits to their workers.
Prior to Obamacare, those in the individual market substantially tailored their plan to their specific needs. Many started out with a maximum out-of-pocket annual cost in mind and then engaged in a cafeteria-style approach of picking their coverage.
Overall, young adults will see their individual coverage rise while those in the pre-Medicare category of 55 to 65 years old will see their costs ease. Thats in part due to an ACA regulation that says no insurer can charge older customers more than three times as much as young policyholders. In the past, that ratio was sometimes 10-1.
Whitford adds that Priority Health is offering policies with deductibles as low as $1,000 a year while competitors in the past sold coverage that entailed annual deductibles of up to $5,000 or $10,000.
Hetzel said the mix of costs offered on the exchange range as low as this: An individual policy for a working poor head of household living in Wayne County who earns a bit too much to qualify for Medicaid will pay next to nothing under a BCBS plan.
In all cases, policy holders who have received a cancellation notice are urged to call their insurance company or insurance agent to receive advice on how to proceed through this complicated process. One more caution: The changes in the marketplace may continue for years as insurers try to compete and innovate to best other companies on the exchange.
The Affordable Care Act, Hetzel said, is like a meteorite landing in the ocean. The ripples of change will go through the industry for some time.
The Obamacare system has sparked the cancellation and replacement of millions of health insurance policies that dont offer all of the Affordable Care Acts 10 essential benefits required of all coverage:
Ambulatory patient services
Emergency room services
Maternity and newborn care
Mental health and substance abuse treatment
Prescription drug coverage
Rehabilitative services and devices
Laboratory services for medical tests
Preventive and wellness services
Pediatric care for dental and vision