WASHINGTON – At least 140,000 Minnesotans who buy health insurance on their own are being notified that their plans will no longer be available under the new federal health care law, adding to the national furor over canceled policies that has overtaken the health care debate.
Unlike many states, Minnesota guarantees renewability of health insurance plans, meaning that technically, no policies are being canceled. Some who are being offered different plans, however, say that’s a distinction without a difference.
Industry officials say higher premiums and added benefits are likely in store for most of those who now buy high deductible/limited coverage plans on the individual market. Medica Vice President Dannette Coleman said that while some customers could see lower rates, “there could be some tough conversations. These are big impacts to a lot of people.”
The notices are part of a nationwide wave of insurance company letters that have prompted GOP ire over President Obama’s repeated assurances that under the Affordable Care Act, people could keep their current policies if they liked them.
“Clearly, what Obama said about ‘if you like your plan you can keep it’ was false,” said retired Bloomington police officer Dan Murphy, who recently got a letter from his insurance company offering him a modified plan that meets the standards of the Affordable Care Act, including maternity coverage, which he does not need. The new plan would jack up his monthly premium by $210, or about $2,500 a year. “That’s a big ouch,” Murphy said.
Administration officials and congressional Democrats say that in many cases the discontinued policies will be replaced by better policies at more affordable rates through the new state- and federally run health care exchanges, such as Minnesota’s MNsure. Government subsidies will be available to many to keep the price affordable.
Critics, however, say that costs will rise dramatically for some, and they will have little choice but to upgrade to more comprehensive insurance policies when the individual mandate goes into effect on Jan. 1.
The new front in the battle over Obamacare — as Republicans term the law — comes as administration officials have been called to testify before Congress about problems plaguing the rollout of HealthCare.gov, the government website for the health care exchanges.
Health and Human Services Secretary Kathleen Sebelius, testifying before a House panel Wednesday, denied that people are losing health insurance under the new law. “Continuing coverage is part of the law, and that wasn’t the case in the past,” she said.
In Minnesota, much of the concern has focused on a narrow slice of the population, including Murphy, one of about 280,000 Minnesotans who buy insurance as individuals rather than through employers or other groups. Analysts say that’s about 5 percent of the health insurance market in the state.
Many who carried insurance before the enactment of the law in 2010 could be “grandfathered” under their existing terms, assuming no significant changes in their benefits and deductibles since then. The state’s largest private health insurer, Blue Cross and Blue Shield, says it was able to grandfather most of its individual customer base, but that still left about 62,000 facing the effect of the new law.
Blue Cross executive Scott Keefer said that in their letters to policyholders, “we told them we would help make the transition.”
State industry officials emphasize that the old plans are being changed automatically to conform to the new law, not canceled. “The products were all brought up to date to comply with federal rules,” said Eileen Smith, a spokeswoman for the Minnesota Council of Health Plans.
But for those losing their old bare-bones benefits packages, it could mean the same thing. “We won’t be able to sell them those products,” said Marcus Merz, President and Chief Executive Officer at PreferredOne, a state insurance company with about 15,000 affected members.
HealthPartners, one of the three largest insurers in the state, said about 12,400 of its policies will be affected. “We notified members that some changes had to be made to their plan as a result of the law, but that they could renew their policy with those changes,” said Andrea Walsh, executive vice president and chief marketing officer at HealthPartners.
Coleman said about 50,000 Medica customers in Minnesota who buy insurance on their own will be affected.
For buyers on the individual market, the most significant changes are new rules limiting deductibles and requiring “essential health benefits” such as coverage for maternity, chemical dependency treatment and prescription drugs.
Murphy, who is 52, said his current high-deductible plan does not include many of those benefits, and that’s the way he likes it. “They chose not to call it a cancellation, but the bottom line is that policy is no longer available.”
Across the nation, an estimated 10 to 15 million people buy insurance in the individual market, and the GOP has focused on their predicament as a cautionary tale of what they see as the pitfalls of the entire law.
Critics say the new health care law was sold under false pretenses.
“This is a classic bait-and-switch,” said Minnesota GOP Chairman Keith Downey, who himself got an insurance company letter offering a $340 monthly increase for his individual health plan. “If a private-sector enterprise did that, they’d be in court for false advertising.”
Minnesota Republicans have used the revelation to attack DFL backers of the Affordable Care Act, particularly U.S. Sen. Al Franken, whose narrow election victory in 2009 helped ensure passage of the law.
Franken, like many other Democrats, emphasized that the vast majority of American will not, in fact, have to change plans. In a statement, he also put part of the onus on the insurance companies:
“While the overwhelming majority of Minnesotans get their insurance through their employers or programs like Medicare and won’t have to change plans, I’m concerned for the people whose plans have been canceled because insurance companies altered their policies, as they routinely do, and because some policies don’t meet minimal quality standards,” Franken said. “This process is complicated, so I understand why people are frustrated.”
Follow Kevin Diaz on Twitter @StribDiaz.