Some Insurance Plans Were too Good to Be True All Along

Junk Insurance Under Scrutiny - Should Be (again)

Many of the health policies that Americans liked and now apparently cannot keep may have been terrible insurance plans that were created to scam consumers in the first place. Let's take a closer look as I have paraphrased from the main article from Mother Jones here and described below in part:

Insurers have been sending out hundreds of thousands of notices alerting customers that their current plans won't comply with the ACA as of January 1, 2014, and that the owners of those plans and policies need to find alternatives.

Republicans and conservatives pointed to the development as evidence that Obama lied about “keeping your policy if you like it. 

The President apologizes as seen here – not for lying, but perhaps for not knowing the pitfalls.

One part of the ACA was designed specifically to prevent insurance companies from peddling lousy insurance plans and to force these firms to replace these sub-par products with affordable plans providing better and effective coverage. The plans being canceled are ending because they offered insufficient coverage — and only a few years ago both GOPers and DEMS were upset about these kinds of plans. But there's been collective amnesia about the shoddy plans that GOPers have happily exploited in recent days.

Perhaps Mr. Obama should have said, “Those of you who obtain insurance on the individual market can keep your plans unless it’s the sort of rip-off plan the ACA will forbid. Otherwise, you will be offered new options that actually give you decent coverage at a decent price.” Here's what led to the current situation:

In the early 2000’s, the number of people with employer-based coverage declined dramatically. That left an increasing number of Americans uninsured and about 30 million adults under insured and at serious financial risk – facts we all know as true. 

The Commonwealth Fund estimates that between 2003 and 2010, the number of under insured Americans nearly doubled.

The fastest growing group of under insured was people in households around the national median income, the $40,000 to $50,000 annual income range — that is people who make too much money to qualify for Medicaid but who don't have employer-sponsored plans or who can't afford the ones they're offered.

Insurance companies saw that and jumped into the void with a lot of products that Consumer Reports dubbed as junk insurance seen in this report. These were plans that barely qualified as insurance because they had very low caps on coverage or weren't even really insurance at all. 

Many were merely medical discount programs that didn't protect against health-related financial calamity. Insurance companies, including many of the biggest, marketed these products aggressively and often misleadingly — which was made easier by the lack of disclosure requirements in the sale of health insurance. Regulators struggled to protect consumers because so many of the junk plans were perfectly legal.

Take the case of HealthMarkets, Inc., a company owned by the Goldman Sachs Group and Blackstone Group – two Wall Street giants. That company had run-ins with state regulators repeatedly regarding its sale of junk health insurance on the individual market and they ended up paying more than 40 million in settlements with state AG’s due to its deceptive sales practices between 2008 and 2010.

In 2009, after a long investigation, the Massachusetts attorney general fined the company $17 million and banned it from doing business in the state for five years.  Health Markets was also plagued with individual consumer lawsuits and class actions.

All kinds of stories have been standard fare for years before Obama-care. Even Republicans were outraged by the junk policies. For example, in 2008, Sen. Charles Grassley (R-IA) launched an investigation into AARP's limited benefit health plans and held a hearing on junk insurance plans seen here.

Sen. Grassley was inspired by a Wall Street Journal article about a Texas woman, Lisa Kelly, who was diagnosed with leukemia and required cancer treatment. She was referred to the M.D. Anderson Center in Houston. When she called to schedule her first chemo appointment, the hospital told her to bring with her a check for $45,000. Kelly had a limited-benefit policy sold by AARP that required her to pay all of the medical costs up front. Then it would reimburse her $7,500 per procedure, which didn't cover the treatment cost.

Continue the story and your research at the links. Yes, the President apologized - that's more than I can say for the GOP and Insurance Giants ... now, all of you: Fix the damn program and make it work.