The horror stories are rampant. In Alabama alone, Blue Cross Blue Shield is canceling 87,000 health insurance policies. Around the nation, people who liked their inexpensive individual insurance plans say they must replace them with a more expensive one because of the Affordable Care Act.
The stories raise two distinct issues, one minor and one major.
One is whether President Barack Obama lied when he said, more than once, “If you like your plan, you can keep it.” This is the minor one.
Certainly Obama was wrong. Maybe he was making a paternalistic assumption that people do not “like” lousy individual insurance policies. Or maybe he was lying; it would hardly be the first time for a U.S. politician. This is a minor issue, because he’s serving his final term as president. His fluctuating poll numbers really don’t much matter.
Distinct from Obama’s motives in making the false statements is whether the fact not all people can keep the cheap individual insurance policies they “like” is a bad thing.
The policies being canceled under Obamacare do not meet even the minimum standards of the law. They fall far short of the excellent “platinum” insurance, fall short of the gold and silver policies, and can’t even meet the minimalist coverage requirements of a bronze policy.
The common gripe is that it’s unfair for one insured to have to pay premiums for a service he will never use; why should a man have to pay premiums for policies that cover maternity care or mammograms? But this is not unique to Obamacare. Men already pay premiums for policies that cover uterine cancer, just as women pay premiums for prostate cancer. It’s called sharing the risk, and it’s the point of insurance.
A recent Consumer Reports investigation looked at a horror story that went viral. A 56-year-old Blue Cross insured told CBS her monthly premium would jump from $91 to $591.
For starters, Consumer Reports concluded her actual premium would only increase to $165 after subsidies.
More importantly, her $91 policy was “junk insurance,” to use Consumer Reports’ term.
The plan she likes was of little benefit even for minor ailments. If she were to require treatment for something major — Consumer Reports used the example of breast cancer — the $91 policy would be all but worthless.
The investigation assumed a $120,000 treatment cost for breast cancer. The policy the woman said she likes because it costs her little in premiums would leave her with a $119,000 bill. The policy that complies with the ACA, while it has a higher premium, would limit her personal expense to $6,300.
Because the woman had an annual income of $30,000, a $119,000 medical bill probably would mean bankruptcy and a shifting of her providers’ unreimbursed costs to the rest of us.
The uproar over the fact that some people with individual insurance will pay more under Obamacare may suggest the president was dishonest.
More importantly, however, the uproar focuses attention on the number of people who have junk insurance that provides little protection for them and almost none to a nation reeling under the burden of unpaid medical bills.