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The Real Story Behind the Phony Canceled Health Insurance Scandal


Health & Wellness  (tags: abuse, americans, babies, cancer, children, disease, drugs, family, government, healthcare, illness, medicine, nutrition, prevention, protection, safety, society )

Kit
- 317 days ago - motherjones.com
Insurance companies ripped off Americans for years with lousy health plans. Obama care was designed to fix that.



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Kit B. (276)
Monday November 4, 2013, 8:51 am
Photo Credits: Andrey_Popov/Shutterstock; Logo: Department of Health and Human Services/Wikimedia Commons



In 2009, when President Barack Obama first promised that people who liked their insurance coverage would be able to keep it under the Affordable Care Act, he overlooked one critical fact: Many of the health policies that Americans like are terrible insurance plans that were created to scam consumers.

Over the past few weeks, insurers have been sending out hundreds of thousands of notices alerting customers that their current plans won't comply with the ACA as of January 1 and that the owners of these plans need to find alternatives. Republicans and conservatives pointed to the development as evidence that Obama lied. Several prominent right-wingers who were covered under these plans, including Fox New contributor Michelle Malkin, have helped fuel this outcry. When Malkin got her cancelation notice, she went on the Twitter warpath. She later wrote a piece for the National Review slugged, "Obama lied. My health plan died." Malkin had a high-deductible plan from Anthem Blue Cross, which doesn’t meet the minimum coverage requirements created by the ACA. So she has to get a new plan on the state health exchange. Malkin blamed Obamacare for destroying the individual insurance market.

The media have covered these complaints with gusto, as if the cancelations are a genuine crisis and indication of a failure of Obama's health care law. The ACA was designed specifically to prevent insurance companies from peddling lousy insurance plans and to force these firms to replace these subpar products with affordable plans providing better and effective coverage. The plans being canceled are ending because they offered insufficient coverage—and only a few years ago both Rs and Ds were upset about these kinds of plans. But there's been collective amnesia about the shoddy plans that GOPers have happily exploited in recent days. Perhaps Obama should have said, "Those of you who obtain insurance on the individual market can keep your plans unless it’s the sort of rip-off plan the ACA will forbid. Otherwise, you will be offered new options that actually give you decent coverage at a decent price.

Here’s what led to the current situation: In the early aughts, the number of people with employer-based coverage declined dramatically. That left an increasing number of Americans uninsured and about 30 million adults underinsured and at serious financial risk. The Commonwealth Fund estimates that between 2003 and 2010, the number of underinsured Americans nearly doubled.

The fastest growing group of underinsured was people around the national median income, the $40,000 to $50,000 annual income range—folks who make too much to qualify for Medicaid but who don’t have employer-sponsored plans or who can’t afford the ones they're offered. Insurance companies jumped into the void with a lot of products Consumer Reports dubbed "junk insurance." These were plans that barely qualified as insurance because they had very low caps on coverage or weren’t even really insurance at all. Many were merely medical discount programs that didn’t protect against health-related financial calamity. Insurance companies, including many of the biggest, marketed these products aggressively and often misleadingly—which was made easier by the lack of disclosure requirements in the sale of health insurance. Regulators struggled to protect consumers because so many of the junk plans were perfectly legal.

Take the case of HealthMarkets Inc., a company owned by the Goldman Sachs Group and Blackstone Group, two Wall Street giants. It had run-ins with state regulators repeatedly regarding its sale of junk health insurance on the individual market. The company paid out more than $40 million in settlements with state attorneys general over its deceptive sales practices between 2008 and 2010. In 2009, for example, after a long investigation, the Massachusetts attorney general fined the company $17 million and banned it from doing business in the state for five years.

HealthMarkets was also plagued with individual consumer lawsuits and class actions. Among those who sued the company was Doug Christensen, a cancer survivor who bought a HeathMarkets plan from the National Association for the Self-Employed. A sales rep had knocked on the door of his office and offered him a policy for $434 a month that would cover him and his wife, and include $100,000 worth of chemotherapy coverage. He didn’t realize that the bargain policy had a host of limitations, including a cap on drug expenses at $1,000 per day, which wasn’t close to what the treatment ended up costing when his bone cancer returned. Doug eventually died, and his widow was left with $450,000 in unpaid medical bills because the policy was so bad. She won a $1.7 million settlement with the company in 2005.

Stories like these had been standard fare for years before Obamacare. Even Republicans got outraged. In 2008, Sen. Charles Grassley (R-Iowa), launched an investigation into AARP’s limited benefit health plans and held a hearing on junk insurance plans. He was inspired by a Wall Street Journal article about a Texas woman, Lisa Kelly, who was diagnosed with leukemia and required cancer treatment. She was referred to the M.D. Anderson Center in Houston. When she called to schedule her first chemo appointment, the hospital told her to bring with her a check for $45,000. Kelly had a limited-benefit policy sold by AARP that required her to pay all of the medical costs up front. Then it would reimburse her $7500 per procedure, which didn’t cover the treatment cost.

Grassley's staff investigated the AARP's plan and discovered that the insurance company was using highly deceptive marketing practices. When he made the results public, Grassley decried the evils of the individual health insurance marketplace saying, "It's not better than nothing to encourage people to buy something described as 'health security' when there's no basic protection against high medical costs."

AARP ended up discontinuing some, but not all, of the plans. Today, the individual market is still plagued by consumer abuses that have left many people at risk of medical bankruptcy or lack of access to care. "A lot of insurance that is sold today is like a Swiss cheese insurance policy. It’s insurance that doesn’t really insure,” says Ron Pollack, the executive director of Families USA, a health care advocacy group that supports the ACA.

Many of the plans on the individual market are so bad that people who have them might as well be uninsured. "The only people who like those plans are people who have never needed them," says Nancy Metcalf, a senior editor at Consumer Reports. "They haven't figured out yet how terrible they are. They think they have good coverage but they don't."

A good example might be Dianne Barrette, 56, who appeared on CBS News with Jan Crawford last week for a segment about the wave of cancelations. Barrette, a realtor in Florida, was upset because her $54 a month insurance plan was being canceled. She believed a new one would cost her more than $500 a month due to Obamacare. "What I have right now is what I’m happy with," she said. "I just want to know why I can’t keep what I have. Why do I have to be forced into something else?"

But here’s the rub: Barrette’s $54 plan wasn't even insurance. When I talked to her, she was unsure of what her plan covered. But she said it was what Blue Cross calls a "supplemental" or discount plan, which only pays $50 toward doctor’s office visits and a few other out-patient services, including mammograms. What her plan doesn’t cover: hospitalization. Not at all. So if she gets hit by a car, the people ultimately picking up the tab will be the hospital and everyone else (by way of higher medical costs). If she gets cancer, she’s basically out of luck. "It's all I could afford," she told me.

Blue Cross was selling these plans in malls and other retail insurance "shops" in an effort to target young people who don't have or don't think they need health insurance, luring them in with cheap premiums of between $24 to $54 a month. The plans came with a not-well-disclosed caveat that they were not designed to replace hospital-surgical plans, which Blue Cross encouraged people to buy— provided the purchasers could get past all the exclusions for preexisting conditions.

Blue Cross is now canceling 300,000 plans in Florida, and, no doubt, a lot of them are such "Go Blue" plans. (A spokesman from Blue Cross of Florida wouldn’t answer any specific questions about which plans are getting canceled.) The ACA was designed to replace plans like the one Barrette bought. And every plan sold on the Obamacare exchanges must provide a minimum and meaningful level of coverage, including free preventive care, mental health and maternity coverage, hospitalization, and rehabilitation services that are indispensable for anyone who has a disability, who becomes injured in a bad accident, or who has a degenerative disease such as multiple sclerosis. These plans don't have annual or lifetime coverage limits of any sort. And the insurance companies selling plans on the exchange must disclose coverage terms in such a way that people know what they're getting and can compare similar plans.

Much of the recent media coverage treats the old junk plans as a national treasure, their loss a true scandal. Far from being a victim of Obamacare, Barrette should have been a story about someone who will benefit immensely from the Affordable Care Act. According to the Kaiser Family Foundation premium calculator, Barrette, who makes about $30,000 a year, is eligible for an annual tax credit of up to $3,967 a year, which could get her a silver plan on the exchange for $234 a month (in cost to her), or a bronze plan, with slightly higher out of pocket costs, for $97 a month. True, with the bronze plans, she’d be paying $43 a month more, but in return, she would have true protection and access to health care, not sham coverage. A bronze plan would replace her $50 doctor’s office discount with free preventive care services, including mammograms, cover hospitalization and other services, and cap her out of pocket costs at slightly more than $6,000 a year. Barrette should be cheering the death of her old plan.

The same is true of the other conservatives who’ve groused about losing a plan, including Malkin. As Metcalf points out, "If they’re having to cancel out a plan with a $10,000 deductible and end up with a plan with a $2,500 deductible, that’s a better plan, period." Pollack says, "As people now get real protection, the premiums may be somewhat higher, but it’s a different product and you’re saving money on the back end. The Affordable Care Act eliminates lousy coverage, which ultimately saves cost for people when they receive care."
****

By: Stephanie Mencimer | Mother Jones |

Stephanie Mencimer is a staff reporter in Mother Jones' Washington bureau.
 

Sue H. (7)
Monday November 4, 2013, 9:58 am
Excellent article, thanks. The Insurance Robber Barons have run amok with outrageous premiums for too long.
 

Arielle S. (317)
Monday November 4, 2013, 10:20 am
Excellent rebuttal to the "Obama lied to us!" campaign - too many people ready to scream bloody murder without even asking if there's a body....I wonder how we get people to start thinking for themselves?
 

Beverly M. (85)
Monday November 4, 2013, 12:50 pm
Thank you for sharing this Kit ~ I hope more people read it and find out what's actually going on. Insurance regulation, getting the insurance industry in line, is part of the core plan of the Affordable Care Act and like Wall Street the insurance companies thought they could skirt around the new regulations and keep doing business as usual. After all, Wall Street can do it right? Kaiser Permanente was fined $4 million earlier this year by the state of California for its lack of mental health care coverage. Some learn the hard ay.
 

SuSanne P. (182)
Monday November 4, 2013, 1:05 pm
Unbelievable news I am sickened by. I was completely living under a rock re:
"Take the case of HealthMarkets Inc., a company owned by the Goldman Sachs Group and Blackstone Group, two Wall Street giants. It had run-ins with state regulators repeatedly regarding its sale of junk health insurance on the individual market. The company paid out more than $40 million in settlements with state attorneys general over its deceptive sales practices between 2008 and 2010. In 2009, for example, after a long investigation, the Massachusetts attorney general fined the company $17 million and banned it from doing business in the state for five years."
Thank you Kit for always explaining truths I otherwise don't truly understand.
 

Robert B. (57)
Monday November 4, 2013, 1:55 pm
kff.org is an Excellent website to get info on all health care and has a calculator that will give you a rough idea of what your premium would be if you have to buy your own insurance. Very informative site.
 

Kit B. (276)
Monday November 4, 2013, 2:18 pm

The kff.org/ is for the Kaiser Foundation Insurance, I don't know if that is available in all states, but I can say that I know people that sing the praises of Kaiser Family Foundation, Thanks Robert.
 

Wayne W. (12)
Monday November 4, 2013, 2:46 pm
Thank you, Kit. That needed to be said. The government has often and rightly banned defective products and those junk insurance plans are exactly that.
 

Lois Jordan (55)
Monday November 4, 2013, 3:21 pm
Noted. Thanks for the info, Kit. So many were just so happy to keep "dumping" on Obama. Back in the 80's and early 90's, I used to help my mom submit her health insurance forms for her. (Blue Cross-Blue Shield). It was awful to keep getting rejected based on her "pre-existing conditions." Then, her doctor would prescribe a treatment, which she'd get....then the insurance company would reject it because it was considered "experimental." Some of the procedures had been around for awhile, too. I used to get so mad, because she was paying so much for her policy. I know it's only gotten much worse since then. Although it isn't the single-payer we wanted, the ACA will be very helpful to so many. We were able to keep our young adult kids on our plan longer, which helped a lot.
 

marie c. (168)
Monday November 4, 2013, 3:41 pm
Noted
Thanks Kit
 

pam w. (191)
Monday November 4, 2013, 5:02 pm
GREEDGREEDGREEDGREEDGREED!
 

Laurie H. (714)
Monday November 4, 2013, 9:30 pm
Thank you so much Kit for this informative & timely information!! I hope as more & more people discover for themselves, how better healthcare policies will Improve their lives, the better things will become. I know that many will be given subsidies, to help pay for better plans &coverage---something to celebrate!!! I would love to have crystal ball to peek into the future a bit & see how things have gone!!!~
 

Dogan Ozkan (5)
Monday November 4, 2013, 10:05 pm
noted
 

TomCat S. (286)
Tuesday November 5, 2013, 12:21 am
Between Republican lies and industry scams, the truth is certainly refreshing!
 

Craig Pittman (45)
Tuesday November 5, 2013, 5:25 am
It is refreshing to see the other side of the story - the clear and honest one. Let's hope this message gets the same wide distribution as the disinformation nonsense. Thanks Kit.
 

Kit B. (276)
Tuesday November 5, 2013, 6:01 am

By now you have all heard the constant clamor, led by none other than the infamous Fox. Of course, Romney joined in the fray to take his punch, though he knew better and fully understands what this about he couldn't resist the opportunity for calling the president a liar. I sometimes watch 'Morning Joe' to see what the other side of the question is like. That show too, well Joe Scarborough a less than bright light is among those pumping the poison into the water. Yesterday, on Face book there was a article about one woman that was paraded around Fox and Morning Joe as the example of someone "losing" their policy. A sub par policy by any gage, now she is talking a different story. Yes, her cheap policy was canceled, and now has been fully replaced by one that she pays less for and has a more comprehensive policy. Scarborough complained that the president treats the people as the ignorant peasants, well Joe when the shoe fits.

I don't see that Obama lied, though I do agree that just a few extra words of explanation might have avoided this completely unnecessary food for fodder grist mills.
 

Nancy M. (201)
Tuesday November 5, 2013, 9:22 am
Thanks for posting this Kit. Much of this I did not know. Thankfully, I have almosty always had coverage through my job.
 

Val R. (242)
Tuesday November 5, 2013, 9:49 am
Interesting Kit - I have personal stories that seem horrible but I agree many people do noot know what their "supposed" health care insurance actually covers - I just pray they don't change my Medicare.
 

Nancy M. (201)
Tuesday November 5, 2013, 10:20 am
The thing though is that now it may be temporarily worse. Just syaing (and warning). I have been getting all kinds of scam mail about this card and that card that I am entitled to. It's all a bunch of garbage, I am sure.
 

Kit B. (276)
Tuesday November 5, 2013, 10:28 am

Oh Nancy it wouldn't be the United States if all the scammers didn't show up to try steal money from the unsuspecting with each new program. The best thing to do is ignore them.
 

Nancy M. (201)
Tuesday November 5, 2013, 10:31 am
Well, I know that but many others don't.

Yes indeed, the greediest country in the world. Is that what makes us so allegedly great?
 

Barbara K. (84)
Tuesday November 5, 2013, 11:13 am
Thank you, my friend, for getting the truth out on this non-scandal. The rightwingers are always in the dark about what is going on, as they are never told the truth from their own side of any event. They will find out that that was a great part of the ACA. It could keep them from going bankrupt if they have an expensive illness. When I had a deadly heart attack in 2006, my medical bills were over $150,000 at that time, would be more now. Thankfully, I have great insurance and owed nothing. Having good insurance is definitely a great advantage.
.
 

Bryna Pizzo (139)
Tuesday November 5, 2013, 11:58 am
Thank you for helping to expose the truth which the major network media is not doing. Clearly, the Republicans cooked up this :"scandal" to prevent the people from getting addicted to healthcare or sugar as Cruz called it.
(n, p, t)
 

Kit B. (276)
Tuesday November 5, 2013, 12:36 pm

Yes, the world according to Cruz, if life is a bit easier then it can't be a good thing.
 

John S. (303)
Wednesday November 6, 2013, 1:33 am
So the new rates are more expensive? Why do I think if they came up with these principles for auto or house insurance people would be furious? Realize that why 16% of GDP is spent on health care, only 6% is paid for out of the individuals pockets. As for what was said, he could have explain what would happen as oppose to saying what would not happen, so it was a lie (not a fib, a fib is told when you have no benefit, this was a lie). Finally, are you really telling me this was the best option for handling health care?
 
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