What Exactly Are Insurers Canceling? And Why?

A THCB reader in New York writes in:

There is one aspect of the ACA that isn’t being discussed a lot, but is pertinent to the future landscape of health care in this country — the extent to which the ACA is causing a sort of reset, or wiping of the slate, when it comes to insurance policies and procedures.

Previously, there were multiple insurers and multiple policies, many of which had been around for a long time.  If an insurer wanted to suddenly change providers in its network, ratchet down provider reimbursement, alter covered procedures or make other adjustments, this was feasible, but too much of a change would entail an outcry limiting insurers’ freedom of action.  The overall system had a certain air of stability or inertia, making any changes stand out, any big changes cause for scrutiny and possibly rebellion.

Now, with the ACA, everything is being tossed up in the air and when things land, much can and will be different.  Some changes are mandated by the ACA, such as minimum coverage, and insurers are cancelling inadequate policies, substituting very different ones.  But even when a policy doesn’t need to be changed, insurers will justify change by pointing to the ACA.

“Given the requirements of the ACA, we must make certain changes to your policy. In particular…”

We are at the beginning of a totally new insurance landscape, even if most of the insurers remain the same.  The public has been primed to expect major change and insurance companies will certainly make use of this expectation.

The result is likely to be more restrictive networks, decreased reimbursements to providers and other measures to limit cost.  Everything is now up for grabs.

If you have questions about the Affordable Care Act or your buying insurance on the federal state exchanges, drop us a a note. We’ll publish the good submissions.

2 replies »

  1. The ACA felt it had to coerce insurers to be “better”. This was because they believed all the stories of cancelled policies, etc. These stories were all true but the conservatives trusted competition to make the insurers better corporate citizens and the left did not. Thus we had to uproot millions of couplings of people/insurers and a reign of madness ensued.

    If the ACA had focused only on helping people rather than correcting them we would see a different landscape. We should allow the insurers to offer anything the want in the exchanges, including underwritten plans with any benefits. But then we should work on correctly subsidizing the poor.–this is difficult and may include means testing and medical needs testing–and then allowing people to buy whatever they want in the exchanges. This would have whipped up frenzied competition between insurers in the exchanges and we would have seen them become corporate angels as a result.

    The only thing we can do now is to strive for more freedom– to sell anything and buy anything in the exchanges whilst working desperately to skillfully and fairly subsidize the poor and the medically needy.

  2. Insurers have been ratcheting down reimbursement to providers for the last 20 years in some sectors — but the policyowners keep seeing their premiums go up and not down.

    I do not think this a 1%-Marxist conspiracy. (not that I have any love for the 1%!)

    Instead you have the aging curve in health insurance……once people are on any policy for over three years or so, the total claims go up fast and premiums have to increase. Even if the insurer pays a little less on each claim, the grand total of expenses goes up.

    So you have doctors complaining about low reimbursement and insureds facing higher premiums at the same time.

    The ACA probably makes things worse because it expands the number of covered procedures.