Obamacare's critics are going to town on the cancellation letters millions of Americans are receiving from their health insurers, informing them that their health plans won't conform to the new federal standards for health coverage as of Jan. 1.
We're supposed to be scandalized by this, since President Obama himself assured everyone that if they liked their insurance they'd be able to keep it. And people just love plans that in some cases cost just $50 a month. At that price, what's not to love?
Back in March, Consumer Reports published a study of many of these plans and placed them in a special category: "junk health insurance." Some plans, the magazine declared, may be worse than none at all.
Consumer Reports is right. Plans with monthly premiums in the two figures marketed to customers in their 30s, 40s, or even 50s invariably impose ridiculously low coverage limits. They've typically been pitched to people who couldn't find affordable insurance because of their age or preexisting conditions, or who were so financially strapped that they were lured by the cheap upfront cost.
"People buy a plan that's terrible," says Nancy Metcalf, CR's senior project editor for health, "and if they get sick, they don't even know they don't have insurance."
An example from CR: A plan costing $65 a month held by Judith Goss, 48, a Michigan department store employee. When Goss was diagnosed with breast cancer, she discovered the drawbacks of the policy's coverage limits of $1,000 a year for outpatient treatment and $2,000 for hospitalization -- barely enough to cover a day and half a Tylenol in the hospital. She delayed treatment, so her cancer got much worse before she finally opted for surgery. Those sorts of coverage limits are illegal come Jan. 1.
Many of the supposedly bereft insurance customers being paraded before viewers of network and cable news -- and dredged up by House Republicans during today's theatrical grilling of Health and Human Services Secretary Kathleen Sebelius -- fall into this junk category. The news reporters never seem to lay out the benefits actually provided by these low-premium policies their subjects supposedly love, or their steep back-end costs if they actually get sick.
Consider the case of Diane Barrette, the 56-year-old Florida woman whose cancellation horror story was reported by a credulous CBS News and picked up by Fox News, which has been a one-stop shop for your Obamacare misinformation needs. (We mentioned the Barrette case on Tuesday.)
CR's Metcalf examined Barrette's Blue Cross Blue Shield policy and made two discoveries: how junky it really is, and how badly her insurer may have misled her about her options. Barrette's $54 monthly premium bought her almost nothing. The policy pays $50 per office visit (which can run two or three times that) and $15 per prescription (which can run to thousands of dollars a month); above that she's on her own. Nothing for a colonoscopy. Nothing for mental health treatment. Up to $50 for hospital and ER services -- and then only if her treatment is for "complications of pregnancy." Nothing for outpatient services.
"She's paying $650 a year to be uninsured," said an insurance expert Metcalf consulted. If she ever had a serious medical problem, "she would have lost the house she's sitting in."
As for the replacement plan her insurer offered, at a shocking $591 a month? Barrette has much better options via the government insurance exchange. (Or she will once the federal system gets running.) Metcalf estimated that she'll be eligible for "real insurance that covers all essential health benefits" for as little as $165 a month -- a higher premium than she's paying now, sure, but one that won't cost her her home.
That raises the question of whether the insurers sending out these cancellation notices are trying to cheat their customers, a point made by Paul Waldman at the American Prospect and echoed by Kevin Drum at Mother Jones. Expecting insurance companies to play fair with their customers is as pointless as expecting dogs not to drink from the toilet, but what's the excuse of the reporters who retail these yarns without fully checking them out?
It's time to tamp down the breathless indignation about these health plan cancellations. Many of the departing plans are being outlawed for good reason, and many of the customers losing them have no idea how much financial exposure they were saddled with in the old days. That's the real scandal in American health insurance, and Obamacare is designed, rightly, to fix it.
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