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Health Care Reform:

Health Insurance & Affordable Care Act

Affordable Care Act: Cancellations Explained

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Q. How are insurers picking policies to discontinue?

A. Some consumers fear they are being targeted because they are unhealthy or otherwise unprofitable for an insurance company. Kansas Insurance Commissioner Sandy Praeger said insurers can only discontinue entire blocks of business and cannot simply pick and choose certain customers to cancel.  Those whose policies are canceled can sign up instead for a new plan and can’t be rejected because of their health. Insurers say they are ending policies that don’t meet the law’s standards or were not grandfathered. And some of those are profitable plans: Kaiser Permanente in California, for example, says the biggest block of policyholders losing their current coverage were enrolled in a popular $4,000 deductible plan with no maternity benefits that was doing so well that they had not had to raise rates in several years. They actually had to send rebates to policyholders last year under a provision of the health law that requires insurers to spend at least 80 percent of enrollees’ premiums on medical care or issue rebates. (KHN is not affiliated with Kaiser Permanente).

 Q. My insurer says if I renew before the end of the year, I can keep my current plan. What does this mean?

A.  In some states, insurers are offering selected policyholders a chance to “early renew,” meaning they can continue their existing plan through next year, even if it doesn’t meet all the law’s standards.  If you choose this option, your premium may still go up, but the cause would be medical inflation, rather than the need to add benefits because of the health law.  Not all states allow early renewals. Fearing insurers would offer such renewals only to their most profitable plans, a handful of states, including Illinois, Missouri and Rhode Island, barred insurers from doing it.

Q. Why are premiums changing?

A. Under the old rules, insurers could decide whether to accept you - and how much to charge -- based on answers to dozens of medical questions. You no longer have to fill out those forms. Starting Jan. 1, insurers can no longer charge women more than men, reject people who are sick or charge them more and can charge older people only three times more than younger ones. They’re also adding new benefits.

As they drew up the rates for 2014, insurance firms had to make educated guesses about how many customers would stay, how many new ones they would attract - and what the health conditions of those new members might be.  Actuaries say the new rules on how much insurers may vary rates level the playing field, making premiums more of an average. Older buyers or those who had above-average health problems - and whose former rates reflected those problems - may find their premiums going down. Younger or healthier people, on the other hand, may find premiums going up, sometimes sharply.  Under the new rules, consumers “are not paying based on their own health status, but an average health status,” said Robert Cosway, an actuary with consulting firm Milliman. “The positive side is that people in poor health won’t have to pay as much, but the way you get there is that people in better health have to pay more.”

Wed, Oct 30 2013

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