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November 17, 2013 10:28 AM UTC

Insurance "Cancellations?" In Colorado, Don't Believe The Hype

  • 19 Comments
  • by: Colorado Pols
A mild example.
An example of said hype.

A fascinating story this weekend from the Denver Post's Michael Booth:

More than two-thirds of the 250,000 people whose health policies the state Division of Insurance said last week were "terminated" have actually been offered renewals of existing plans through 2014, according to research by U.S. Sen. Mark Udall's office.

Thousands more of those can keep policies because they were "grandfathered" under different Affordable Care Act rules, Colorado insurance companies said, complicating the raging debate over Obamacare…

One consumer advocacy group said that while the impact on the small number facing an absolute cancellation is real, "there's been a lot of hype and not a lot of drilling down into the facts."

"It's been a small and vocal minority, exacerbated by support from those who oppose Obamacare," said Dede de Percin, director of the Colorado Consumer Health Initiative, a supporter of the Affordable Care Act.

Part of this is a function of Colorado having a separate, and by all accounts better functioning system and rules than other states. Consumers and even health care advocates locally are constantly having to respond to horror stories from elsewhere, exaggerated and sometimes real, which are either way wrongly applied to the situation in Colorado. Rules from the Colorado Division of Insurance already more or less allowed the "renewals" into 2014 that Obama has proposed nationally. Booth reports that Sen. Mark Udall, having proposed legislation that would have allowed existing policies to renew for two years, found the figure of 250,000 policy "cancellations" in Colorado disproportionate and started asking questions. It will be interesting to see if these findings affect how Udall proceeds with that legislation.

It's important to remember also that these "cancellations" are almost entirely within a very small segment of insurance plans, those offered on the individual and small group markets. As CNN reports, at least some of the uncertainty in relation to the status of insurance and renewal options is directly the fault of insurance companies–but has been wrongly laid at the feet of the Obama administration.

In Colorado, Humana sent a…letter that received an rebuke from state Insurance Commissioner Marguerite Salazar.

That letter told 3,400 Humana policyholders in Colorado that they had to make a decision within 30 days or risk losing their coverage. And just like in Kentucky, the 30-day window ended before the state exchange opened.

"I was disappointed to see a letter that appeared threatening and incorrect going out to consumers. The last thing we need is more confusion," Salazar said of the letter. Her office required Humana to retract and resend the letter and to apologize to its policyholders.

CNN's report this weekend documents similarly threatening and inaccurate letters sent to policyholders all over the country by insurance companies. In some cases, consumers were wrongly told their policies were going to be swiftly canceled, but insuerers failed to give consumers their full range of options–even failing to mention the existence of the exchange marketplaces. Many of these horror stories have been circulating for weeks, misreported by a confused media, and seized upon by Republicans in their never ending quest to undermine President Barack Obama's biggest policy achievement.

That last point is really the most important when trying to evaluate the present state of health care reform. Nobody can deny at this point that the troubled initial rollout of the exchange websites has given the right wing ammunition to assail the Affordable Care Act. Conservative opponents of the law also have a rhetorical "gotcha" on the President and Democrats, whose blanket assurances that "if you like your plan you can keep it" never really made sense–since health plans change just about every year for a lot of the people "affected." Many of the individual market policyholders lumped in with the massive numbers of reported "cancellations" were accustomed to regularly shopping around for a better deal on coverage.

Republican attacks on Obamacare, as we've seen in Colorado, are willfully exploiting the confusion evident in these latest stories. The conservative mediasphere has deliberately hyped outright falsehoods, even before this latest round of incomplete and misleading information. Lawmakers like Colorado's Rep. Cory Gardner have freely misrepresented the facts to help paint the worst possible picture of the implementation. You'll recall Gardner received one of these same "cancellation" letters, which purportedly demanded a 150% premium increase for a "comparable plan." Gardner has waved that letter around on national television and in congressional hearings ever since. But Gardner never released any information about his existing plan to allow an "apples to apples" comparison–nor do we know if his is one of these plans that could have been renewed again anyway.

This weekend, in the midst of all the doom and gloom health care press this week, here are these reports that start walking bacl the half-truths and misreported complexities we're seeing in this debate. In the nearly a year between now and the 2014 elections, we just don't see how the law's opponents can keep the low-information rage going. Despite all the chaff being thrown in the air today, by then, too many people will know better.

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19 thoughts on “Insurance “Cancellations?” In Colorado, Don’t Believe The Hype”

  1. This…

    Many of the individual market policyholders lumped in with the massive numbers of reported "cancelations" were accustomed to regularly shopping around for a better deal on coverage.

     

    has been my experience. There are a number of mystical reasons why insurance companies do the things they do….they will save you money to switch companies only to raise your rates back to where they were in short order. Coverages change willy-nilly.

    You would expect a state insurance commissioners office would try to discourage such nonsense…unless you know something about the Insurance Commission business. (No, I did not just misspeak.)

    1. That's what we did. The way it works with private insurance for the self insured is that there's always a company offering a particularly good deal for pretty high co-pay, high deductible but legitimate insurance that really does cover hospitalization, etc. at the same rate as better policies. It's real, not junk insurance but it still requires a lot of out of pocket and is still very pricey compared to having employer provided insurance. It works OK if you're healthy and don't need anything terrible expensive, like serious surgery. That's been us. We've been lucky. 

      But once they rope you in, they start raising rates  a goodly chunk after the first year and pretty dramatically the second year.  So you look for whoever is offering a special low, low rate that year to attract new customers and switch. That is unless you have acquired a preexisting condition in the meantime which in the self insured market can be something extremely minor. I once was turned down for the best priced policy because I had taken prescription allergy medication during the previous year. I had to switch to over the counter and re-apply the following year. 

      We always had an independent agent who would keep track of upcoming rate raises, let us know when we should switch and then find us the best deal. Over the years we switched every two or three years. The first year we'd usually just raise our deductible even higher to keep our rate the same and the second or third year we'd discover that was still going to mean a much higher rate so we'd switch.

      We never got to keep the plan we liked for the price we liked for long. So switching is nothing most middle income self insured people are unfamiliar with. Once you have a serious condition however, if you aren't dropped your stuck (or at least you were and still would be without the preexisting condition reform) and you'd have to pay ever increasing rates as you could or go without, in which case, you'd have to lose everything before you could get medicaid. 

      Yes people can go to to the ER but you don't get continuing treatment there and you do get billed so it's not like the ER is much of a safety net. This is how nice responsible people with insurance wind up bankrupt, a uniquely American phenomenon. 

      All that said I'm not a fan of  ACA's mandate without a public option. I think mandate that forces people into the clutches of a rapacious sky high profit private insurance industry sucks.  Mandate should absolutely require a public option. 

      ACA makes a bad system less bad in a few, granted important, ways. It's still leaves us behind those countries that have a universal decent package for all.

  2. My agent (a very conservative Republican) warned that one Colorado company in particular (which shall remain nameless) is playing "bait and switch" with its customers by shunting them to its own website and encouraging them to early-renew non ACA policies that require medical screening for pre-existing conditions.  Their rates will go up as they do every year, but the company has pegged the rate at slighly below what it is offering on the exchange so it can cherry-pick the healthier ones.

  3. It's delicious watching Rick Santorum this morning on national TV simultaneously attacking ObamaCare and trashing the insurance industry and its bullying/stall tactics at addressing patient care. 

    Not unlike my Congressman Gardner, a man paid in excess of $170k, and thanks to this taxpayer largess is able to buy his own private insurance.  A family that will never wonder if they are just one health incident away from bankrupcy or hunger.  A man who has no qualms pimping himself on Fox News, willfully misrepresenting the facts behind the "250,000 cancellation notices" in Colorado.  A man who seemingly has no interest in solving the health challenges of his 100k+ constituents who need access. An avowed conservative who would shut down the government over the health care law – and stick this country with a $24 billion tab.

    I generally just monitored my social media this weekend – choosing not to participate in the amount of Obama-hate goin' around.  It's been full of [soon-to-be] ex-friends and acquiantances still raging over ACA.  It's Cory's "Rush effect" on his constituents, and it's borderline criminal.  Still waiting for him to further explain the particular of his own plan.  I won't hold my breath.  

     

     

  4. Not trying to be a twit here, Pols, but …who is doing your proofreading lately?

    Hickenlooper with three O's?…cancellation with one L?

    You do have a review function on your end…right? I understand typos in the text…but your headlines?

  5. No biggie…I am just kinda AR about it.

     

    the popularity of cancelation vs. cancellation in the US, cancelation is almost 3 times as common in the US after the 80s.

    So that is, in my view, just a validation that Americans can no longer spell worth a shit.

  6. Pols, can you research this? Scott Tipton is lying and distorting aca in an op-ed in the Steamboat Springs Gazette. His main claim is that the ACA law is "broken". To back this claim, he has what I think are probably fake anecdotes:

    Tipton claims:

    • A small church in Durango that has a group policy for its employees told me that under the president’s health care law, its premium is increasing nearly 50 percent — an additional $22,000 per year for its five employees. Like many businesses, families and individuals, the church simply can’t afford it.

    • Jenifer, from Monte Vista, wrote to my office: “Last evening I went on my insurance company’s website to see what my premium will be under the Affordable Health Care Act. I am in total shock. My husband and I are in very good health, we are in our late 50s and our premiums are going from $498 per month to over $1100 per month with less coverage. What part of this is affordable?”

    • To add insult to injury, residents in Colorado’s 3rd District have noticed that the costs of their premiums can be nearly double the price of someone living in an urban area. Steve, a 3rd District constituent, sent us an email saying that the lowest bronze plan premium when quoted for his Cortez ZIP code was $1,023. When he entered a Denver ZIP code for the exact same plan, the premium was $652. This amounts to a penalty on rural America and is blatantly unfair.

     

    I will try calling his satellite office in Pueblo. Some of his staff are reasonable people, and may give me contact information to check on the stories of  "Jennifer" and "the small church in Durango". It would be better if someone from the Durango area checked that one. I can check on the claim about the bronze policy being more in rural Colorado than it is in a Denver zip code.

     

    1. I took it upon myself to fact check the rates in Denver versus Cortez (which only takes about 10 minutes). I used my family situation (adults and one infant, all young and healthy).

      Denver zip code 80030 rates started at 426/month.

      Cortez zip code 81321 rates started at 707/month.

      That's an increase of about 65% based on no differing information other than locality. For fun, I put in my own zip code (Castle Rock) and got the same 426 rate as Denver (metro Denver is probably all about the same). Cortez may be getting particularly screwed, as I put in 81050 for La Junta and had a rate of 544/month.

    2. The church in Durango shouldn't be affected by the rates on the exchange – it's a group policy (unless it isn't, in which case continue reading to my last paragraph). Also, IIRC, incorporated entities were given an extra year to get in line with the ACA guidelines. In short, they might be getting the runaround from their insurance company.

      Jenifer from Monte Vista didn't state if her current plan was ACA-compliant, or if it wasn't up to snuff.

      However, as DD notes, some of the rural exchange rates are significantly higher than their urban counterparts. In theory, this shouldn't affect individual rates disproportionately – insurers were free prior to the ACA to charge differing amounts in different areas. And rural areas do tend to have lower population densities that can raise various healthcare costs (e.g. cost per-person for a hospital). I do think that the state government should be asking why the huge differences, especially given the number of people in these areas that say their rates are skyrocketing.

      1. I think I am in the same zone as Cortez and my premium increased about 65% for comparable coverage (albeit a pre-existing condition is now covered, however I have an HSA funded already to deal with that if needed) and my deductible went down from 10k to 6.5k.  I'm OK with that, but the zone system is kind of screwy IMO.  

         

    3. People in rural areas have been getting screwed for years on a lot of things: gas for our cars, groceries, even beer. The alternative is having to live in the big city.

      Everything has a price.

  7. So I shopped for equivalent plans for Cortez, Pueblo, and Denver, using those zip codes,  on connectforhealthcolorado.com . It turns out that Cortez plans are 30-40% more expensive. I attribute this to less availability of hospitals, clinics, and doctors in smaller and more remote markets:

    Market

    low

    high

    level

    # of hospitals

    Comparative costs for single 55 year old person (bronze plan)

    Cortez

    588

    639

    bronze

    8

    Pueblo

    426

    565

    bronze-silver

    10

    Denver

    355

    481

    silver

    136

    I'd be interested to hear from CCHI about the disparity. Regarding the other claims made by Tipton in his op-ed in the Steamboat Spring Gazette, I doubt that they are accurate. It will take someone with journalistic credentials to investigate, however.

    1. Well, I guess that the table function in the comment menu doesn't work, either, or I don't know how to do it. The point is, the more hospitals/clinics/doctors, the lower the cost.

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