Many Americans who now have insurance on the individual market will not be able to keep their policies, as President Obama had promised. That's because the plans don't meet the minimum standards required under the Affordable Care Act, including a $6,350 limit on annual out-of-pocket costs and coverage of mental health, maternity and medication.
These new requirements are forcing many insurers to either add benefits or terminate the policies. The new offerings usually come at higher rates because they have more comprehensive coverage and must be offered to people with pre-existing conditions. Many insurers have been able to keep rates low because they offered catastrophic plans with high deductibles and minimal benefits, and they could cherry pick among applicants to only pick the healthiest ones.
Customers have been getting letters informing them of the changes to or cancellation of their policies, often along with their insurer's offerings for 2014. While it's not uncommon for insurers to change policies from year-to-year, the sticker shock has caused outrage and alarm among some.
Valentina Holroyd of San Ramon, Calif., is very disappointed with her choices on the Obamacare exchange. The Kaiser Permanente plan she's had for the past year is being terminated and the "equivalent" plan for 2014 carries a 29% hike in premiums, plus a host of other cost increases. The retired high-tech saleswoman looked through the policies offered on the exchanges, and the only one comparable in monthly rate would hike her deductible from $1,500 to $5,000. Even worse, her doctor visits, prescriptions and chiropractic appointments would be subject to it, unlike her current plan.
"There's nothing comparable to what we're paying now," said Holroyd, 58, who is not eligible for federal subsidies. "We're angry."
Only a handful of existing plans will be grandfathered in since the qualifying criteria is hard to meet: Members have to have been enrolled in the policy before the ACA passed in March 2010, and the plan has to have maintained fairly steady co-pay, deductible and coverage rates until now.
Consider Blue Cross Blue Shield, a major player in the current individual market and the exchanges. Most existing Blue Cross individual plans will be revised or discontinued, said Kim Holland, the trade group's executive director of state affairs. So many of its customers will have to consider new policies.
Blue Cross Blue Shield of North Carolina, for example, expects only about a quarter of customers to stay in grandfathered policies. These folks will retain their current coverage, which may not contain many of the expanded benefits that will be available under Obamacare.
While many customers may receive letters reflecting steep increases in premiums, they won't really know what they'll have to pay until they shop on the exchange. If they make less than $46,000, or $94,200 for a family of four, they will be eligible for a federal subsidy to lower their monthly costs.
In North Carolina, Blue Cross expects 60% of its current policyholders to be eligible for subsidies, along with 66% of new customers. The subsidies will cover about half the premiums, on average, though there is a wide variation, Bruce Allen, the insurer's marketing director, said earlier this year.
And even if they don't qualify for a subsidy, they may find cheaper policies from other insurers on the exchanges. (Of course, many people haven't been able to shop on the exchanges because of the sites' technical difficulties.) But it will require them to shop around.