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November 4, 2013
Viewpoints: Dig deeper on insurance cancellation hype

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(Nov. 4 -- By Bruce Maiman, Special to The Bee)

Obamacare cancellation hype has blinded us to a critical question: If, under the Affordable Care Act, you actually lose your old health insurance plan, did you really have adequate coverage to begin with?

Probably not.

Yet when CBS News reported last week that 56-year-old Florida resident Dianna Barrette would, under Obamacare, lose her $54-a-month health plan for a new $591-a-month policy, it was all about "sticker shock" and "Obama lied!"

In truth, CBS News blew it, and many of us fell for it. Did no one even bother asking in what world a $54-a-month policy buys any kind of coverage in any form of insurance? Barrette's policy, which can be examined online, doesn't even cover the cost of a hospital admittance fee should she fall ill. When made aware of this by, of all people, Fox News' Greta Van Susteren, Barrette admitted she really had no idea.

Many an unhappy insurance customer trucked out by network and cable news, and dredged up by House Republicans during last week's grandstanding fall into this category: low monthly premiums beckoning like moths to a flame, comforting customers happy because they're unaware of their plan's steep back-end cost if they actually get sick.

Time and again, we lament, "Why should I pay more for health insurance to pay for those with none or not enough?" In California, that's roughly 7 million uninsured - more than any other state - and 1.65 million underinsured, according to Covered California, the state's health insurance marketplace.

Ah, but Barrette wants to keep her plan, you argue, and Obamacare takes away that choice.

Even if that choice costs us money? Because we don't toss out the sick if they can't pay. We don't say, "Too bad. You didn't take proper precautions."

Instead, hospitals pass those unpaid costs onto insurers who pass them onto customers through higher premiums and reduced benefits - true trickle-down economics. And if those with little or no coverage go bankrupt from medical bills - still the nation's No. 1 reason for bankruptcy filings - or perhaps lose their homes and go on welfare and food stamps, guess who pays?

When do we tell the Dianna Barrettes of the world they have to pay their own way?

For better or worse, Obamacare does that.

"We're creating a floor for what health coverage should look like, a basic standard of health care coverage should be at least this," Kaiser Permanente spokesman Chris Stenrud tells me.

"The new rules stop insurers from offering bad policies," said Ethan Rome, executive director of the advocacy group Health Care for America Now. "Before, people didn't know what they were getting because insurance companies weren't interested in telling them."

They still may not be. Many of the roughly 350,000 Californians receiving cancellation notices were offered new ACA-compliant plans, though that may have benefited insurers more than customers.

Los Angeles-area realtor Deborah Cavallaro, 60, repeatedly told news outlets her insurer recommended a policy nearly $200 more than her current $293-a-month premium. Yet, when Los Angeles Times columnist Michael Hiltzik tracked her down, she hadn't even checked the smoothly running Covered California website. Together, Hiltzik found her far better coverage for $100 less than she's now paying.

Apparently, we've forgotten our anger toward insurers in the years prior to the ACA's passage - raising premiums as policies grew less generous, rescinding thousands of Californians without cause, as lawsuits and regulatory investigations later found.

Eliminating policyholder plans was "common in the individual market," Deputy Insurance Commissioner Janice Rocco told me. "Often they were trying to switch policyholders into new products they thought would make more money for the insurer."

Profit over service? I'm shocked!

Will new premiums rise? Blue Shield of California estimates two-thirds of its 119,000 policyholders receiving cancellation notices will see rate increases in their new policies; a third will pay less.

It's uncertain how many of the nation's 84 million uninsured and underinsured will pay more or less for their policy until we see how many qualify for subsidies provided under the federal law, but Rocco makes an important point: "Policy would likely be more expensive in terms of the premium but less expensive in out-of-pocket costs when you see your medical provider."

Good, given the many educated policyholders who are unaware how much their coverage exposed them to financial hammer blows that all of us ultimately have to pay for. A study published last year in the journal Health Affairs found more than half of individual policies in 2010 fell into that category.

Did President Barack Obama lie? That's politics, not policy. His law isn't perfect, but no first step in seismic policy shifts ever is, and the inevitable adjustments required forthwith will be lost if we don't tamp down on breathless indignation, media melodrama, partisan agendizing and our 140-character Twitterverse thinking.

Bruce Maiman is a former radio host who lives in Rocklin. Reach him at brucemaiman@gmail.com.

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