How Insurers Are Hiding Obamacare Benefits From Customers

From Talking Points Memo

Donna received the letter canceling her insurance plan on Sept. 16. Her insurance company, LifeWise of Washington, told her that they’d identified a new plan for her. If she did nothing, she’d be covered.

A 56-year-old Seattle resident with a 57-year-old husband and 15-year-old daughter, Donna had been looking forward to the savings that the Affordable Care Act had to offer.

But that’s not what she found. Instead, she’d be paying an additional $300 a month for coverage. The letter made no mention of the health insurance marketplace that would soon open in Washington, where she could shop for competitive plans, and only an oblique reference to financial help that she might qualify for, if she made the effort to call and find out.

Otherwise, she’d be automatically rolled over to a new plan — and, as the letter said, “If you’re happy with this plan, do nothing.”

If Donna had done nothing, she would have ended up spending about $1,000 more a month for insurance than she will now that she went to the marketplace, picked the best plan for her family and accessed tax credits at the heart of the health care reform law.

“The info that we were sent by LifeWise was totally bogus. Why the heck did they try to screw us?” Donna said. “People who are afraid of the ACA should be much more afraid of the insurance companies who will exploit their fear and end up overcharging them.”

Donna is not alone.

Across the country, insurance companies have sent misleading letters to consumers, trying to lock them into the companies’ own, sometimes more expensive health insurance plans rather than let them shop for insurance and tax credits on the Obamacare marketplaces — which could lead to people like Donna spending thousands more for insurance than the law intended. In some cases, mentions of the marketplace in those letters are relegated to a mere footnote, which can be easily overlooked.

The extreme lengths to which some insurance companies are going to hold on to existing customers at higher price, as the Affordable Care Act fundamentally re-orders the individual insurance market, has caught the attention of state insurance regulators.

The insurance companies argue that it’s simply capitalism at work. But regulators don’t see it that way. By warning customers that their health insurance plans are being canceled as a result of Obamacare and urging them to secure new insurance plans before the Obamacare launched on Oct. 1, these insurers put their customers at risk of enrolling in plans that were not as good or as affordable as what they could buy on the marketplaces.

TPM has confirmed two specific examples where companies contacted their customers prior to the marketplace’s Oct. 1 opening and pushed them to renew their health coverage at a higher price than they would pay through the marketplace. State regulators identified the schemes, but they weren’t necessarily able to stop them.

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