White House knew millions could not keep plans under Obamacare

Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a "cancellation" letter or the equivalent over the next year.

By MSN Money Partner Oct 29, 2013 11:41AM

CNBCBy Lisa Myers and Hannah Rappleye, NBC News

 

President Obama repeatedly assured Americans that after the Affordable Care Act became law, people who liked their health insurance would be able to keep it.

 

But millions of Americans are getting or are about to get cancellation letters for their health insurance under Obamacare, say experts, and the Obama administration has known that for at least three years.

Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a "cancellation" letter or the equivalent over the next year because their existing policies don't meet the standards mandated by the new health care law.

 

One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience "sticker shock."

 

None of this should come as a shock to the Obama administration.

 

The law states that policies in effect as of March 23, 2010 will be "grandfathered," meaning consumers can keep those policies even though they don't meet requirements of the new health care law. But the Department of Health and Human Services then wrote regulations that narrowed that provision, by saying that if any part of a policy was significantly changed since that date the deductible, co-pay, or benefits, for example the policy would not be grandfathered.

 

Screenshot of the HealthCare.gov website, Courtesy of HealthCare.GovBuried in Obamacare regulations from July 2010 is an estimate that because of normal turnover in the individual insurance market, "40 to 67 percent" of customers will not be able to keep their policy. And because many policies will have been changed since the key date, "the percentage of individual market policies losing grandfather status in a given year exceeds the 40 to 67 percent range."

 

That means the administration knew that more than 40 to 67 percent of those in the individual market would not be able to keep their plans, even if they liked them.

 

Yet President Obama, who had promised in 2009, "if you like your health plan, you will be able to keep your health plan," was still saying in 2012, "If [you] already have health insurance, you will keep your health insurance."

 

"This says that when they made the promise, they knew half the people in this market outright couldn't keep what they had and then they wrote the rules so that others couldn't make it either," said Robert Laszewski, of Health Policy and Strategy Associates, a consultant who works for health industry firms. Laszewski estimates that 80 percent of those in the individual market will not be able to keep their current policies and will have to buy insurance that meets requirements of the new law, which generally requires a richer package of benefits than most policies today.

 

The White House does not dispute that many in the individual market will lose their current coverage, but argues they will be offered better coverage in its place, and that many will get tax subsidies that would offset any increased costs.

 

"One of the main goals of the law is to ensure that people have insurance they can rely on – that doesn't discriminate or charge more based on pre-existing conditions. The consumers who are getting notices are in plans that do not provide all these protections – but in the vast majority of cases, those same insurers will automatically shift their enrollees to a plan that provides new consumer protections and, for nearly half of individual market enrollees, discounts through premium tax credits," said White House spokesperson Jessica Santillo.

 

"Nothing in the Affordable Care Act forces people out of their health plans: The law allows plans that covered people at the time the law was enacted to continue to offer that same coverage to the same enrollees – nothing has changed and that coverage can continue into 2014," she said.

 

Individual insurance plans with low premiums often lack basic benefits, such as prescription drug coverage, or carry high deductibles and out-of-pocket costs. The Affordable Care Act requires all companies to offer more benefits, such as mental health care, and also bars companies from denying coverage for preexisting conditions.

 

Today, White House spokesman Jay Carney was asked about the president's promise that consumers would be able to keep their health care.

 

"What the president said and what everybody said all along is that there are going to be changes brought about by the Affordable Care Act to create minimum standards of coverage, minimum services that every insurance plan has to provide," Carney said. "So it's true that there are existing healthcare plans on the individual market that don't meet those minimum standards and therefore do not qualify for the Affordable Care Act."

 

Other experts said that most consumers in the individual market will not be able to keep their policies. Nancy Thompson, senior vice president of CBIZ Benefits, which helps companies manage their employee benefits, says numbers in this market are hard to pin down, but that data from states and carriers suggests "anywhere from 50 to 75 percent" of individual policy holders will get cancellation letters.

 

Kansas Insurance Commissioner Sandy Praeger, who chairs the health committee of the National Association of Insurance Commissioners, says that estimate is "probably about right."

 

She added that a few states are asking insurance companies to cancel and replace policies, rather than just amend them, to avoid confusion.

 

A spokesman for America's Health Plans says there are no precise numbers on how many will receive cancellations letters or get notices that their current policies don't meet ACA standards. In both cases, consumers will not be able to keep their current coverage.

 

Those getting the cancellation letters are often shocked and unhappy.

 

George Schwab, 62, of North Carolina, said he was "perfectly happy" with his plan from Blue Cross Blue Shield, which also insured his wife for a $228 monthly premium. But this past September, he was surprised to receive a letter saying his policy was no longer available. The "comparable" plan the insurance company offered him carried a $1,208 monthly premium and a $5,500 deductible.

 

And the best option he's found — on the exchange so far offered a 415 percent jump in premium, to $948 a month.

 

"The deductible is less," he said, "But the plan doesn't meet my needs. Its unaffordable."

 

"I'm sitting here looking at this, thinking we ought to just pay the fine and just get insurance when we're sick," Schwab added. "Everybody's worried about whether the website works or not, but that's fixable. That's just the tip of the iceberg. This stuff isn't fixable."

 

Heather Goldwater, 38, of South Carolina, is raising a new baby while running her own PR firm. She said she received a letter last July from Cigna, her insurance company, that said the company would no longer offer her individual plan, and promised to send a letter by October offering a comparable option. So far, she hasn't received anything.

 

"I'm completely overwhelmed with a six-month-old and a business," said Goldwater. "The last thing I can do is spend hours poring over a website that isn't working, trying to wrap my head around this entire health care overhaul."

 

Goldwater said she supports the new law and is grateful for provisions helping folks like her with pre-existing conditions, but she worries she won't be able to afford the new insurance, which is expected to cost more because it has more benefits. "I'm jealous of people who have really good health insurance," she said. "It's people like me who are stuck in the middle who are going to get screwed."

 

Richard Helgren, a Lansing, Mich., retiree, said he was "irate" when he received a letter informing him that his wife Amy's $559 a month health plan was being changed because of the law. The plan the insurer offered raised his deductible from $0 to $2,500, and the company gave him 17 days to decide.

 

The higher costs spooked him and his wife, who have painstakingly planned for their retirement years. "Every dollar we didn't plan for erodes our standard of living," Helgren said.

 

Ultimately, though Helgren opted not to shop through the ACA exchanges, he was able to apply for a good plan with a slightly lower premium through an insurance agent.

 

He said he never believed President Obama's promise that people would be able to keep their current plans.

 

"I heard him only about a thousand times," he said. "I didn't believe him when he said it though because there was just no way that was going to happen. They wrote the regulations so strictly that none of the old polices can grandfather."

 

For months, Laszewski has warned that some consumers will face sticker shock. He recently got his own notice that he and his wife cannot keep their current policy, which he described as one of the best, so-called "Cadillac" plans offered for 2013. Now, he said, the best comparable plan he found for 2014 has a smaller doctor network, larger out-of-pocket costs, and a 66 percent premium increase.

 

"Mr. President, I like the coverage I have," Laszweski said. "It is the best health insurance policy you can buy."

 

More from CNBC

80Comments
Oct 29, 2013 1:29PM
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I got my cancellation notice a month ago - you know the "plan that I like that I can keep?" The Obamacare "replacement" costs 70% more for a higher deductible, and  pays only 60% of the "covered expenses" vs the 80% I have now. I will never believe anything this liar says again and I will never vote for a Democrat again. 

Oct 29, 2013 1:12PM
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When all of the bugs are worked out millions will get affordable healthcare courtesy of the US taxpayer. This is just another freebee given to the mooching class by the democrats in exchange for votes. SNAP,  section 8, ADC, welfare, and ACA paid for by others to keep the dem base happy on the inner city reservation.  It sure would be nice if the dems paid their own way for once. "If you like your insurance , you can  keep it".
Oct 29, 2013 1:48PM
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What's the main difference between Pinocchio and Obama?...Obama's nose remains unchanged when he talks.
Oct 29, 2013 2:14PM
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Can you say "impeachment."   Obama is falling fast under his own weight.  Needs no help from the GOP.   Most underqualified Prez in history - the job demands way more than he has experience for.  Totally incapable.  I'll bet deep inside he is shaking like a leaf and has been since day one.  He truly knows what a fraud he is - unfortunately most of the American people and the media are just now figuring it out.

Oct 29, 2013 1:27PM
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So what.

 

As long as this thing keeps getting rammed down America's throat and we're worse off as a country, it still accomplishes this president's goal of diminishing American preeminence. 

 

I didn't know I had a Cadillac plan, but now my HR informs us that next year we've going from a copay to a deductible plan for the next 4 years and then we hit the streets with $2500 in hand and are on the hook for another $8K for yearly (my pocket) health insurance that costs more and covers less (Bronze).  I looked at the more premium plans (Silver, Gold, etc.) and they are WAY out of my price range.

 

Thanks liberal @holes.

 

The only thing that could mess this country up is the idiots on the inside.

 

Supposedly my only salvation in this whole slowly unfolding devastation is the knowledge that we're all supposed to suffer equally?  The definition of Socialism?

 

Still, I think this is the right course for the country to wake up to this nonsense.  If you have idiot children running around a kitchen and don't know what a hot stove is and they won't listen to advice, it's best they get burned.  Quicker as a nation we learn the "This is America, just say no to Socialism" lesson the better, but it's going to take A LOT of burned fingers before it sinks in.  

Oct 29, 2013 1:28PM
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No surprise here, and why did it take MSN a full day to catch up with Fox News?
Oct 29, 2013 2:06PM
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The people happy with ACA are:

 

Loser low life welfare moochers (SNAP, section 8, ADC, and other welfare puppies)

Those with pre-existing conditions

Parents of 26 yr old kids living in the basement

Unemployed on COBRA or COBRA benefits ran out

Low income earners with crappy coverage

Those exempted from it

 

People unhappy with ACA are:

 

Middle class tax payers that are ineligible for credits

Employees that had good insurance but didn't get the UAW exemption

Employees that had their hours cut to under 30 per week

 

Oct 29, 2013 2:11PM
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Ironic isn't it. We are a country that is made up of a majority of shysters that are trying to cheat our government out of all of the freebies that one can get such as welfare, social security disability, HUD section 8 free or subsidized housing, Food stamps/EBT/SNAP benefits, Obama phones, expanded unemployment benefits, earned income tax credits (fraud is rampant in all of these)....and, now, we find out that our government has shystered us all with Obama-care......ironic. You shall reap what you sow.
Oct 29, 2013 2:42PM
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Impeach Obama, he is destroying America!!!
Oct 29, 2013 3:05PM
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Why in the world is this a surprise to people!?  Liar liar.....
Oct 29, 2013 2:41PM
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Obama the Destroyer strikes again!!!
Oct 29, 2013 3:23PM
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OK, everyone had to see this coming, that means everyone! No doubt our so called president is a narcissist as labeled @ the beginning of his running for the office the first time around! so just read it & weep, cuz this is what you wanted by voting him in office 2 times & exactly what you get for doing so!!!!!
Oct 29, 2013 3:20PM
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If Obummer's mouth is moving he's lying.
Oct 29, 2013 1:40PM
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This all begs the question, why didn't Republicans make that issue of the ACA fight. That requirement of opening the Government, that folks could keep the plan they already had. If they had done that instead of pushing for Complete repeal, I suspect most folks would have supported them. Regardless of Party or stance on the ACA.

Obama made a critical error of first always talking too much. Then stating you can keep what you have when clearly for some that's not the case. Just plain stupid on his part. He wouldn't gain anything from doing so and that's begs the question of why. Corporations have never been obligated to keep ANY of the plans you already have, regardless of the ACA. Some folks will never point that out.

Oct 29, 2013 5:30PM
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What a shock! Obama either doesn't know anything about a given issue (Benghazi) or he lies about what he does know! Thank God for the 2-term rule...unless, of course, he gets the sheep to change that also!
Oct 29, 2013 2:59PM
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anybody who really cared had only to look at the romneycare, we in Massachusetts have been living under over the last 10 years or so. first of all thousands of people who had insurance soon found out their insurance did not meet the "standards" set under romneycare, and had to pay the penalty anyway, so allowed their "substandard" insurance to expire. Many low cost providers, quit doing business in Massachusetts, throwing everybody to the wolves  at blue cross, Harvard pilgrim, united health etc. Fewer companies offering less policy options to more people required to buy coverage. who benefitted? those who had no insurance and can get it now free; empoyers, who dump their benefit plans for employees and pay the miniscule penalties for failure to provide coverage, insurance companies who can now screw more subscribers out of more premium $$$ every month; providers who wish to bilk the system out of millions of dollars for unnecessary and imaginary, treatments, procedures, and tests, meanwhile John Q, as per usual, takes the hit every month when he pays his premium required by law to protect his tax exemptions. don't believe me? look it up!
Oct 29, 2013 3:54PM
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Here is an FYI for some of you libtards. Many if not most mid to large cap corporations are self insured and carry re-insurance for large catastrophic claims. They use third party administrators including Blue Cross to pay claims. So a lot of employees think they have third party insurance when they really do not. The companies analyze their claims history every year to determine the costs to pass on to their employees. Typically the company will charge 20-40% back to the employees. So when adding in pre-existing conditions, adults still living with mom and dad, and mandatory additional coverages, these additional costs will be pooled and passed back onto the employees. But libtards think this will save everyone money.  "you can keep your plan if you like it".
Oct 29, 2013 4:01PM
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Holy Crap !     This is following the exact map Glenn Beck was yapping about 4 years ago.

Tea Party ---- time to drop the hammer on this POTUS health rape room organizer.

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