As soon as President Obama finished announcing Thursday that he was breathing new life into formerly scuttled health plans, insurance agent Sarah Freeman’s phone began ringing and email messages started piling up.
Everyone wanted to know: “Does this mean I get to keep my old plan?”
“I kind of saw a glimmer of hope,” said Fraser Ratzlaff, one of the first to call Freeman at her Seattle company, Mutual Benefits. Ratzlaff and his wife had just settled on a new health insurance plan for 2014 but, given the chance, he wanted to go back to his discontinued catastrophic policy.
But while Obama said insurers would have the option of resuscitating health plans that were canceled because they didn’t include the benefits required by the Affordable Care Act, he left it up to the states whether to opt in or out. Washington state Insurance Commissioner Mike Kreidler gave the offer a resounding no.
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The back-and-forth political jolts last week bore right into the heart of how health insurance works, and gets to why the arguments over Obamacare have become so emotional, with people lined up stridently on all sides of the issue.
Health-care reform is based on the idea that most everyone will have comprehensive insurance — healthy, sick, young and old alike — and that no one can be denied coverage because they are ill. But if many people are permitted to keep plans with limited benefits, Kreidler said, possibly jumping into more robust coverage should disease or an accident strike, the system could unravel.
Obama left it up to insurance companies to decide whether to reinstate the discontinued plans, if their state went along. It’s unclear whether insurers in Washington state would have done so if Kreidler had given them the option.
In Washington, 290,000 residents, or about 4 percent of the population, currently buy insurance for themselves in the individual market. Nearly two-thirds of those people are covered by “catastrophic” policies that provide limited benefits. Most people in the state with private plans learned this fall that their policies were being canceled.
State officials expect about half the people buying individual policies will be eligible for tax breaks that will reduce their premiums. And consumers have the freedom to change insurance companies and shop around for plans that are potentially cheaper than the replacement policies suggested by their insurers.
But that doesn’t ease the sting for everyone. Many of the people holding policies now being derided as “bare-bone plans” bristle at the characterization. They say their plans have enough substance to cover their needs.
“I just resent how they’re implying that I’m so stupid, I don’t realize how bad the insurance is,” said Seattle resident Cindy Firmani, who has one of the limited plans for herself and her family. “Just condescend to me a little bit more.”
But Kingston’s Brad Camp is pleased at the chance to upgrade the coverage for his family from a so-called catastrophic plan to one that meets the Affordable Care Act’s new requirements.
“What was squeezing our budget every month was our dental fees, prescription fees and doctors visits,” said Camp, referring to items that in their old plan that weren’t covered or involved high out-of-pocket costs.
“It will save us between $400 and $500 a month on prescription costs and office visits for our kids.”
Before Obama’s announcement, the law required most insurance plans beginning in 2014 to cap deductibles and out-of-pocket expenses at $6,350 per person, and cover a suite of 10 “essential benefits,” including prescription drugs, dental and vision care for kids, maternity care and preventive medicine.
So how bare-bones are the pre-Obamacare plans that are disappearing here, but living on for a while longer in some other states?
In Washington, present catastrophic plans have deductibles from $1,970 to $10,000 per person for services provided by doctors and hospitals included in their plan. That means, with certain exceptions, a policy holder has to spend that much money on medical bills before the insurance kicks in.
Additionally, some of the plans have out-of-pocket limits as high as $20,000. In that case, once a patient spends that sum, insurance covers the rest of the costs. However, out-of-pocket limits don’t always include the cost of drugs, and some plans also stop paying out once medical bills reach $2 million in a year.
Other benefits vary, but many plans do not cover maternity care and have no or limited coverage of prescription drugs. Some pay for only half the cost of a trip to the emergency room or for diagnostic tests such as CT scans or MRIs.
“I have had several clients where they purchased the really catastrophic plans and they got a catastrophic diagnosis, but they’re stuck in that plan,” said Freeman, the insurance broker.
Another condition of a pre-Obamacare catastrophic plan is that policy holders can be subject to nine-month waiting periods to change to more comprehensive plans, and they need to fill out a health questionnaire and be deemed eligible.
But for healthier people, the coverage could fit perfectly.
Seeking more choices
Firmani likes her current policy with LifeWise Health Plan, a subsidiary of Premera Blue Cross. The plan has a $1,970 deductible — less than the new maximum allowed by law — and cost her family of four $1,395 a month. It lacks maternity care but pays 75 percent of the cost of the first six office visits per person, per year.
“I’m 56 years old,” Firmani said. “I’m done having babies.”
In her cancellation notice, her insurance company suggested a new LifeWise plan that actually costs slightly less, but the deductible increases to $6,350 and doesn’t cover the doctors she wants through the University of Washington or Swedish medical centers. One perk: she would get free vision care for her 17-year-old daughter, who needs glasses.
Firmani, who is retired and said her family won’t qualify for a tax subsidy, plans to meet with a broker to look for a plan outside of the insurance exchange, which will give her more choices in terms of which doctors she can see. People seeking insurance can shop inside or outside of the Healthplanfinder exchange, but plans outside the exchange are excluded from subsidies.
Ratzlaff, who called his broker hoping to salvage his old plan, said his $250-a-month policy provided all the benefits the West Seattle couple needed. He isn’t angered about having to upgrade, but he’s not looking forward to a $450-a-month premium with his new coverage. The couple work for an international nonprofit with too few U.S. staff to provide health insurance.
If Ratzlaff had declined coverage, he would face a $645 penalty based on his income.
“I’m not going to do that,” he said. “It puts my wife and me at risk, and it puts our family and friends at risk” because if either of the couple got sick, their family and friends would want to help pay the bills.
Savings for college
In Camp’s case, even if he had the option of keeping his old plan, he would not have.
The professional photographer co-owns Olympic Photo Group and has two children to insure. Now he’s shelling out hundreds of dollars a month for prescription drugs and doctor’s visits for one of his kids.
Thanks to eye exams at school, he recently learned that both kids, age 10 and 15, need vision care. Camp’s wife gets insurance through her employer.
Camp was on a LifeWise plan and will stick with the company. His premium will go up from about $500 a month to nearly $600.
But again, he expects a significant savings from the improved coverage and plans to put that money into his kids’ college funds.
He didn’t agree with the president’s late-breaking decision to alter the rules.
“Changing the game at the eleventh hour may just complicate it more than it should,” he said.
“If you set something in motion, you just have to work through any issues that come up. I’ve had roadblocks setting up a small business, and you work through them.”
Lisa Stiffler, a freelance writer in Seattle, can be reached at email@example.com.
This story was produced through a partnership with Kaiser Health News, an editorially independent part of the Kaiser Family Foundation, a health-policy research and communication organization that is not affiliated with Kaiser Permanente.