News that thousands of individual health care plans were being canceled in Alaska rippled through the public sphere last week, and some have pointed to the canceled plans as evidence of failure of the Affordable Care Act. But the story behind the canceled health insurance plans is perhaps more nuanced than many think.
Premera Blue Cross, Alaska's largest health care provider, said last week that about 5,400 Alaskans on individual plans received cancellation notices in September, because those plans do not meet the requirements under the Affordable Care Act. That's more than half of the 9,000 Alaskans who have individual health care plans through Premera.
The letters informed Alaskans of the cancellation, and says they'll be matched up to a new plan that most closely matches their old one, and automatically enrolled in the plan.
"If you're happy with the new plan we've selected for you, you don't have to do a thing," the letter states.
Deceptive letters?
The letter, however, does not mention the Healthcare.gov website, nor the fact that other insurance options exist.
Similar letters in Washington state have been called misleading, prompting the state to issue a consumer alert in September telling people to know their rights and options when it comes to purchasing a new insurance plan.
Talkeetna resident Anthony Martin agreed that the letter was "deceptive." He received a letter from Premera that he would be automatically enrolled in a plan he said is twice the cost of his old one, leaving him in the dark as to what his full range of options were.
Regarding the cancellation letters, Premera spokesperson Melanie Coon wrote that "We directed members to contact us instead of Healthcare.gov because as their current insurer, we would be best equipped to walk members through plans that best fit their needs."
Only people eligible for a federal tax credit are "likely to find value" in using Healthcare.gov, she wrote.
Nobody will be dropped from coverage by the insurer -- but if an existing Premera member takes no action by Dec. 31, he or she will be automatically enrolled in a new plan, which begins Jan. 1, 2014. Premera's website offers more information on changes and tax credits available under the new law.
Healthcare.gov -- thus far hindered by website glitches -- has plans available for Alaskans from both Premera Blue Cross and Moda Health. Once the Healthcare.gov website gets up and rolling, people should be able to actually compare plans side-by-side, along with the tax credit rates. For now, you can view the plans on the companies' websites.
Two other insurance companies, Aetna and Assurance Health, will offer health care plans that are not on the Marketplace exchange. The difference? Plans listed off the Marketplace will not be eligible for the tax subsidy. So, if your income is too high to qualify for a tax credit, you may want to check out these plans as well.
Why were plans cancelled in the first place?
The Affordable Care Act changed the requirements for health care plans. All plans in place after the bill was signed into law were dumped, and replaced with plans that have more benefits and restrictions, and often higher costs.
There are "10 essential health benefits" that all insurance coverage must carry, including maternity care, behavioral health treatment, prescription drugs, laboratory tests and preventive services. There are no lifetime coverage caps, so people can receive as much coverage as necessary throughout their lives.
What are grandfathered plans?
Plans that were in place before ACA was signed into law on March 23, 2010, and that already have all the requirements of the plan, won't be changing. But Premera does say that those plans will see a rate increase in May 2014.
But this new plan is going to break the bank!
Rates are increasing -- in some cases, drastically. Alaska has the second highest rates in the nation, at an average of $474 per month for a silver plan, according to a Department of Health and Social Services report.
For instance, for a non-smoking family of four in Anchorage, with two 45-year-olds and two dependents under 20, the household will be charged a whopping $1,604 per month for a mid-line "silver" Premera plan.
Some of the costs are due to the increased benefits. In addition, ACA eliminates the cost difference for women and men; women were traditionally charged more than men, because of the costs of pregnancies.
Also, ACA mandated that a 64-year-old could not be charged more than three times what a 21 year-old is being charged for health care -- even though 64-year-olds cost the system seven times what 21-year-olds do. Thus, young people are picking up some of the tab for the elderly. All of these circumstances factor into the increased health costs.
Can I get a tax credit?
Some Alaskans will be eligible for a federal subsidy. The basic requirements are that your employer doesn't offer insurance, you aren't on Medicaid, and your household falls makes between 100 to 400 percent of the federal poverty level. So:
For a household of two making between $19,380 and $77,520, a health care plan will cost between $32 and $614 a month.
For a household of three making between $24,410 and $97,640, a health care plan will cost between $41 and $773 per month.
For a household of four making between $29,440 and $117,760, a health care plan will cost between $49 and $932 per month.
More breakdowns of the federal subsidies are available here and here.
The problem for now? Healthcare.gov still isn't working, so you can't yet enroll in a plan. You'll have to wait until the website is up and running.
Whats up next for the Affordable Care Act?
Software developers are attempting to get Healthcare.gov up and running. The White House says that it will be ready by the end of the month.
New plans begin providing coverage on Jan. 1, 2014. That's when the "10 essential benefits" guidelines kick in, too. Uninsured folks have until March 31, 2014, to sign up for plans or face a tax penalty to the tune of $95, or 1 percent of income, whichever is greater.
Education and outreach continues, even without the functioning of Healthcare.gov, said United Way spokesperson Sandy McClintock. Folks armed with knowledge about ACA are available to speak with Alaskans at health care providers around the state. The insurance broker Enroll Alaska is still helping individuals as well, although the company has stopped using Healthcare.gov for now.
Contact Laurel Andrews at laurel(at)alaskadispatch.com and follow her on Twitter at @Laurel_Andrews