Like your health policy? You may lose it

WASHINGTON -- Many people who buy their own health insurance could get surprises in the mail this fall: cancellation notices because their current policies aren't up to the basic standards of President Barack Obama's health care law.

They, and some small businesses, will have to find replacement plans -- and that has some state insurance officials worried about consumer confusion.

Rollout of the Affordable Care Act is going full speed ahead, despite repeal efforts by congressional Republicans. New insurance markets called exchanges are set to open in every state this fall. Middle-class consumers who don't get coverage on the job can pick private health plans, while low-income people will be steered to an expanded version of Medicaid in states that accept it.

The goal is to cover most of the nation's nearly 50 million uninsured, but even Obama said there will be bumps in the road. And discontinued insurance plans could be another bump.

It also doesn't seem to square with one of the president's best known promises about his health-care overhaul: "If you like your health-care plan, you'll be able to keep your health-care plan."

But supporters of the overhaul are betting consumers won't object once they realize the coverage they will get under the new law is superior to current bare-bones insurance. For example, insurers will no longer be able to turn people down because of medical problems.

Other bumps on the road to the new health-care law include potentially unaffordable premiums for smokers, a new $63-per-head fee that will hit companies already providing coverage to employees and dependents, and a long-term care insurance program that was canceled because of the risk it could go belly up.

The Obama administration did not respond directly to questions about the potential fallout from cancellation notices. Instead, Health and Human Services spokeswoman Joanne Peters released a statement saying: "Beginning in October, individuals and small businesses will be able to shop for insurance in the marketplace, where we are already seeing that increased competition and transparency are leading to a range of options for quality, affordable plans."

For the most part, state insurance commissioners are giving insurers the option of canceling existing plans or changing them to comply with new federal requirements. Large employer plans that cover most workers and their families are unlikely to be affected.

Seen as consumer safeguards by the administration, the new requirements limit costs paid by policyholders and expand benefits. That includes better preventive care and improved prescription coverage in many cases. The most important feature may be protection for your pocketbook if you get really sick: The new plans limit copayments and other out-of-pocket costs to $6,400 a year for individuals.

The National Association of Insurance Commissioners says it is hearing that many carriers will cancel policies and issue new ones because administratively that is easier than changing existing plans.

About 14 million Americans purchase health policies individually -- a number expected to more than double eventually because of the new law's subsidies and one-stop insurance markets. But the transition may not be seamless.

"The impending changes ... have the potential to cause policyholder confusion," said a recent memo from Iowa Insurance Commissioner Nick Gerhart to insurers. Though a Republican-led state, Iowa is helping to carry out major portions of the health care law.

A considerable number of people nationally could be affected by cancellations. Information from insurers still is dribbling into state regulators.

In Washington state, the changes will affect more than 400,000 people, said Stephanie Marquis, spokeswoman for insurance commissioner Mike Kreidler. Marquis said she expects the premiums for replacement plans to be similar to current ones, but with better coverage.

"Your costs involve more than your premiums," Marquis said. "It's also what you would have to pay out of pocket if you had actually used your health plan."

Others see an encroaching nanny state.

"You're going to be forcibly upgraded," said Bob Laszewski, a health-care industry consultant. "It's like showing up at the airline counter and being told, 'You have no choice, $300 please. You're getting a first-class ticket, why are you complaining?"'

Obama's promise dates to June 2009, when Congress was grappling with overhauling the health-care system to cover uninsured Americans. That summer, anxieties about changes erupted at dozens of congressional town halls with constituents.

"If you like your health care plan, you'll be able to keep your health-care plan, period," the president said to the American Medical Association. "No one will take it away, no matter what."

At the time, some saw the promise as too broad, 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 deliver on Obama's pledge. It can shield plans from many of the law's requirements if the plans themselves change little.

State officials said it has been impractical in most cases for insurers to "grandfather" plans sold to individuals. Questions and answers for Virginia insurers provided by state regulators say most carriers are expected to file new policies "given the extensive amount of changes resulting from state and federal laws."

A Washington state insurance department presentation for insurers says plans must mail their discontinuation and replacement notices to consumers by Sept. 15.

State insurance spokeswoman Marquis said, "I don't think it is necessarily a bad thing that they are going to be getting a replacement notice, because they going to be able to go out and shop in this marketplace and they'll be getting better coverage."