October 30, 2013
The Washington Post joined Republicans in hyping the fact that many individual insurance policies are being cancelled with insurers telling people that the reason is the Affordable Care Act (ACA). The second paragraph comments on this fact:
“The notices [of plan cancellation] appear to contradict President Obama’s promise that despite the changes resulting from the law, Americans can keep their health insurance if they like it.”
It would have been useful to point out that the plans that were in effect as of the passage of the ACA were grandfathered. This means that any insurers that cancel plans that were in effect prior to 2010 are being misleading if they tell their customers that the cancellation was due to the ACA. It was not a mandate of the ACA that led to the cancellation of the plan, but rather a decision of the insurer based on market conditions.
This is almost certainly the case with one of the plans described in the article. It refers to a “special plan for the hardest to insure” run by Highmark Blue Shield of Pennsylvania. This plan, which the article says covers 40,000 people, is being cancelled.
Highmark Blue Shield likely decided to cancel this plan because its customers would almost certainly be able to buy cheaper insurance through the exchanges. The main point of the ACA is to create a system of insurance in which the “hardest to insure” can buy insurance at the same price as everyone else. In contrast, Highmark Blue Shield was undoubtedly charging them a considerable premium to cover their larger than normal expected health care costs. Contrary to the theme of the article, it is unlikely that many customers of the Highmark Blue Shield plan will be unhappy about losing the opportunity to pay more for their insurance as a result of the ACA.
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