When President Obama first started using the line about "if you like your insurance plan, you can keep it," he may not have anticipated how many defenders there would be of the reviled mini-med policy.
Who could possibly like these plans, with deductibles up to $10,000 and measly caps on benefits. Even though the policies were cheap, they were health insurance in name only, and anyone who had to actually file a claim was usually shocked when they discovered that their insurance covered so little. According to a 2007 study, nearly 78 percent of people whose illness contributed to a bankruptcy had insurance at the onset of their illness, but the out-of-pocket costs were still too high.
The mini-meds were, however, some type of affordable coverage in the pre-ACA days, which may have been better than nothing until now. With full implementation of Obamacare underway, many of these individuals will find better insurance plans through the exchange, and be eligible for subsidies. With this knowledge, who could possibly still like their mini-med insurance policy.
A friend of mine e-mailed me last week to say that his family's insurance policy was going to jump to $12,000 next year, an especially onerous burden since he and his wife are self-employed. He told me that even though his current policy didn't cover much and had a very high deductible, it was better than nothing.
That $12,000 figure didn't sound right to me, so I did some research. Having access to the premium figures for the federally facilitated plans, I saw that in his geographic region, coverage for a family of three under a Silver plan would cost $10,000 at most (guesstimating his and his wife's ages), and that they would probably qualify for subsidies. Furthermore, I explained to him that a Bronze plan, which was probably similar to his existing plan but with a lower deductible and free preventive care, would even be a couple thousand dollars cheaper.
My friend got back to me and said that he got the $12,000 annual premium figure in a letter from his state's Blue Cross Blue Shield plan. He's apparently not the only one receiving letters from his or her insurer detailing dramatic premium hikes for next year. This particular insurer may have been quoting the price for the Platinum plan.
Giving the insurers the benefit of the doubt, perhaps these letters were printed anticipating that customers could go online and see that there are many policies costing less than the Platinum plan. Like a used car salesman, the insurers quoted the highest possible price so that when the customers see lower cost options, they feel as if they've gotten a deal.
If healthcare.gov was fully operational, and if certain state governments were not actively spreading misinformation about the ACA, this cancellation story would have deflated quickly. Customers currently covered under mini-meds could quickly go online and see that they are eligible for better policies that cost less to them. In fact, many individual policies (in both commercial and Medicare) are "cancelled" at the end of the year, but customers are "transitioned" to the updated plans, with no loss of coverage.
Florida Blue CEO Patrick J. Geraghty has come out publicly to make this distinction. Newspapers in the state have reported that the insurer cancelled 300,000 individual policies (there are similar headlines in Philadelphia and around the nation). Florida Blue has set up a website called My Policy is Being Canceled, Now What that explains that unless you say otherwise, you will continue to be covered and will remain an insured Florida Blue member, with no gap in your coverage. But the choice of your coverage is yours to make, and we're here to help.
Under the ACA, these mini-meds could have been grandfathered in if they existed before March 2010, so any insurance policy being cancelled now must have been created since then. But new policies added since then may have sounded like a slight name or policy number change, and were portrayed as a transition to a similar policy, not a cancellation of the previous and establishment of the new. I'm willing to bet that similar letters were sent to individual policyholders in the fall of 2012 and 2013, but the transition was phrased more delicately, and not as a cancellation directly related to Obamacare.
In fact, many insurers were telling employer groups throughout 2013 to renew early to "lock-in" their existing, lower benefit plans before the Obamacare mandates came through. They knew that the existing policies would be null under the ACA unless grandfathered, but they still sold them to individuals with the knowledge they would be cancelled in 2014.
The lower benefit plans may be cost effective for larger employers not eligible for subsidies, but for individuals in 2014, the mini-meds would be a tougher sell. For one, they can't be sold on the health insurance exchange. Also, the exchange options are far more robust than the mini-meds. These mini-meds are policies that no consumer can truly like, but like loan sharks, they will have their defenders among those with little information, and politicians looking to exploit these people.
Follow Mark Cherry on Twitter @MarkCherryHLI