Can You Really Fire Your Insurance, Mitt?

Romney’s remark last week about firing your insurance company apparently harmed him little  in the New Hampshire primary. But as the quote has rocketed around, it might be misleading some into thinking that the Massachusetts health care reforms that Romney signed into law made it so people can willy-nilly get rid of an insurer that doesn’t pay their claims on time.

The comment deserves a second look. Can you really fire your insurance company? The answer is that it’s darn difficult even in Massachusetts—the land of Romneycare.

Sarah Kliff, The Washington Post’s health policy blogger, took a crack at explaining Romney’s remark. She argued that under Massachusetts’s individual mandate, which requires residents to carry health insurance, someone can sign up for a new policy only during an open enrollment period. That’s to prevent people from gaming the system by signing up for coverage only when they get sick. Insurance companies don’t like that since they end up insuring a bunch of sick people they might lose money on.

Kliff gave only half the answer. She was talking about people buying insurance on their own in the so-called individual market. But most people in Massachusetts have coverage from their employers. They, too, can, change insurers only during open enrollment, and their employer decides whether to offer policies from more than one carrier. And increasingly workers—and not only those in the Bay State—have less choice.

But what if they want to dump their employer’s policy because it’s too expensive or covers too little? Massachusetts law bars them from dropping that coverage and buying a policy through The Connector, the state’s shopping service, where they might find more suitable insurance. As long as their employer’s insurance meets some minimum state standards, they’re stuck.

When national health reform takes effect, the rules will get more complicated. Workers who have employer coverage cannot shop in the new state insurance exchanges and receive a government subsidy unless their share of the premium for employer coverage exceeds 9.5 percent of their gross income. If someone wants to leave an employer policy and doesn’t want a subsidy, they can shop in the exchange.

Romney’s statement prompts another look at Jeremy Devor, the man in the middle whose health insurance problems we’ve been reporting on. He would love to “fire” his insurance company, but can’t now or in the future. So you see, firing an insurance company is not exactly like giving a pink slip to bad employee—even if Romney thinks it is.