How Texas' Hands Off Approach to Obamacare Impacts Canceled Health Plans
Carl Bergquist is on the hunt for health insurance. That’s because in September, the 43-year-old Austinite got a letter from his insurer, Aetna.
"It said that the Affordable Care Act is changing health insurance. And then it says it will affect your health insurance plan," Bergquist says. "It says your policy will end on December 31, you need to buy a new plan."
Bergquist’s plan didn’t meet the basic requirements of the Affordable Care Act. So he had two options. One, he could buy a new plan right now that’s identical to what he has now and pay the same price for one year. Or he could buy a plan that goes into effect in January that meets the ACA’s requirements.
"The plan that they suggested I take, an Affordable Care Act plan, is almost three times more expensive than my current plan," Bergquist says. "I’m sure it’s a very different plan but they’re basically saying, ‘Hey, either keep this very bad plan or take this very expensive plan,’ when there are lots of other options."
He says he has yet to have any luck getting a plan on the federally-run health insurance marketplace - healthcare.gov.
The letter Aetna sent him says the Affordable Care Act compliant plan would cost $330 a month. He’s now paying $116 a month. If he didn’t take action, the company said it would automatically enroll him in the more expensive plan.
Some analysts say those letters are confusing.
"Consumer Reports has reviewed a lot of the notices companies have sent to enrollees. And what they had found is that they’re worded in such a way that enrollees think they have no choice other than to just accept the automatic default plan, that's usually pretty expensive from the insurance company they have now," says Stacey Pogue, a health policy analyst with the Center for Public Policy Priorities. "Turns out nothing could be further from the truth."
In June, the Texas Department of Insurance notified companies like Aetna that they could let enrollees renew their current plans late this year, allowing those to extend into late 2014. Sam Richardson, a professor at the LBJ School at the University of Texas, says the situation is much different in other states.
"California set up its own exchange and said that it would not allow policies to continue passed Jan. 1 if they weren’t complaint with the coverage regulations under the Affordable Care Act," Richardson says. "It’s largely a case of states that got more fully on board with implementing the Affordable Care Act. Those are the places where people are more likely to have their policies canceled effective Jan. 1.
The Texas Department of Insurance doesn’t regulate whether insurance policies comply with the Affordable Care Act or not. So it doesn’t keep track of how many people received cancelation letters. It only gets involved if companies don’t give customers enough time to find another plan.
"Generally it’s 60 days," says John Greeley, a Texas Department of Insurance spokesperson. "And that’s something that was in the law before the Affordable Care Act."
Stacey Pogue with the Center for Public Policy Priorities says she’s urging people who did get cancelation letters to look into their options carefully.
"If the person who has an individual market plan that’s getting canceled has been in that plan for a long time and is sick or older, it could be that moving to the marketplace they’d save money," Pogue says. "If the person is the opposite -- if that person's young, healthy and just bought that plan last year and rates haven’t gone up a lot, moving to the marketplace could cost more money, especially if they’re not low income, if they don’t qualify for subsidies."
Texas has about 750,000 people who buy in the individual market directly from an insurance company – as opposed to getting it through their job. Those who do want a plan through the federal marketplace have until Dec. 23 to buy a plan effective Jan. 1. The next deadline is March 31 – that’s when open enrollment for 2014 ends altogether.