Saturday, January 20, 2018
Health

Some canceled insurance policies were 'junk' targeted by law

Recent days have made it clear that millions of Americans who bought health insurance on the individual market can't do what President Barack Obama said they could: keep their current health plan if they like it.

But some of those now-lamented plans weren't even what most people would consider insurance.

Known as "mini-meds'' or "junk insurance,'' these products often are little more than discount cards that can leave unknowing consumers with huge medical debt. Even a policy expert from the conservative Heritage Foundation, no fan of the Affordable Care Act, says they aren't worth keeping.

One example: the "Go Blue Health Services Card'' for which cancer survivor Donnamarie Palin of New Port Richey has paid $79 a month. For that, she gets $50 toward each primary care doctor visit, $15 toward each drug — but zero coverage for big-ticket items like hospital stays.

"Those are really not insurance," said John McDonough, who worked on the law as a senior adviser to a key Senate committee and now serves as director of Harvard's Center for Public Health Leadership. "You put money in, but you don't get much back."

The Affordable Care Act sets new standards for insurance plans. Unless they existed when the law was passed in 2010 and therefore have "grandfathered" status, plans must offer 10 "essential" benefits, including maternity and mental health coverage. In addition, insurers may no longer charge more to people with pre-existing conditions or set lifetime limits on payments.

Most plans on the individual market don't meet all those standards. Some could pass muster if they added benefits or adjusted out-of-pocket costs, said Bradley Herring, a professor of health economics at Johns Hopkins Bloomberg School of Public Health.

But other plans offer only discounts or pay a small, fixed amount and do little else. "People don't realize the financial protections aren't there," he said.

Ed Haislmaier, senior research fellow for health policy at the Heritage Foundation, which opposes the Affordable Care Act, said a minority of the 16 million people in the individual market have such low-quality plans.

According to his figures, most of those in this market — about 11 million — have traditional "major medical" insurance, even if it falls short of new standards. Another 3 million get plans through professional associations. And about 2 million have short-term policies or limited benefit plans like the Go Blue Health Services Card.

"The argument that this is lousy insurance isn't true for about 11 million people," he said. "A lot of them will end up with higher premiums and possibly higher deductibles."

He agrees, however, that people with "mini-meds" should get tax credits to buy real insurance.

Florida Blue, the state's powerhouse in the individual insurance market, is discontinuing 300,000 policies that are not up to snuff under Obamacare rules. Nearly 30,000 of those are Go Blue, the limited benefit plans.

The insurer launched Go Blue in 2008, targeting the "working uninsured" with incomes between $25,000 and $50,000, according to the insurer. The company said people could use them as supplements to catastrophic policies.

For Michael and Donnamarie Palin of New Port Richey, Go Blue without a catastrophic policy was all they could afford. And since she stayed healthy, it worked fine.

The couple had lost their Tarpon Springs tourist shop in the recession. Michael, 56, decided to skip insurance, but wanted his wife to have some coverage. In late September, the couple got a cancellation notice from Florida Blue, which offered Donnamarie a new plan that complies with the law. The price: $540 a month.

"I nearly fainted," said Michael, a supervisor at a private ambulance company, who remains uninsured. "I was like, 'Why read on?' "

Florida Blue spokesman Paul Kluding said higher premiums reflect more generous benefits. "We tried to match current members to new plans that best match their current benefit package and premium costs," he said.

Buried at the bottom of their two-page letter from Florida Blue was a general statement that Donnamarie might be eligible for federal tax credits to help pay premiums. In their panic, the couple didn't realize what that meant. Michael went to a Florida Blue center, but the employee never mentioned the credits.

Indeed, Michael didn't know they qualify for a tax credit until a Times reporter entered his information into an online subsidy calculator on ehealth, a Web-based broker licensed to sell products through the federal marketplace. It estimated their credit at nearly $10,000 a year — enough to buy affordable insurance for both Palins.

"That'd be great," said Michael Palin.

Said McDonough, the Harvard professor: "Many of these people who think they are losers turn out to be winners."

However, relatively healthy middle-income people who don't qualify for subsidies are already learning they'll have to pay more. Obama on Thursday apologized to those losing their coverage, and said his staff would look for a fix for people who don't qualify for subsidies but still can't afford the higher prices.

Still, if it was clear from the start that the law would change what could be offered on the individual market, why did Obama repeatedly say everyone could keep their plans? Herring, the Johns Hopkins professor, said it likely reflects the political lessons learned when President Bill Clinton tried to overhaul health care — and middle-class voters began to worry what it meant for them.

"One of the big lessons learned from Bill Clinton's attempts is that the majority of people are happy with their coverage," he said, "even if they grumble about the costs."

Jodie Tillman can be reached at [email protected] or (813) 226-3374.

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