Obamacare under renewed fire as Americans lose prior health plans

Consumers in the US face cancellation notices on health insurance policies as impact of Obamacare implementation becomes clear

PUBLISHED : Wednesday, 30 October, 2013, 1:29pm
UPDATED : Wednesday, 30 October, 2013, 1:29pm

President Barack Obama is facing fresh attacks for his pledge that Americans who like their current healthcare plans can keep them under Obamacare after reports that thousands of Americans facing cancellation notices.

Accusations that the pledge was misleading are potentially a deeper threat to Obama than the website glitches that have plagued since its October 1 launch and allowed only a trickle of people to sign up on new federal insurance exchanges.

Another technical problem struck on Tuesday evening as Connecticut’s health exchange said the federal data hub that serves it as well as was “experiencing an outage” – for the second time in three days. A similar technical failure on Sunday also halted enrolment on

Obama has downplayed the problems with the website, saying it’s like a cash register not working, and has stressed that the underlying product of the 2010 Affordable Care Act is “actually really good”.

But critics of Obamacare have seized on the hundreds of thousands of Americans due to lose their current plans because they fail to include essential benefits required by the law and are asking whether Obama misrepresented the law.

“Can you understand the level of frustration and concern about what many Americans perceive to be a false claim from the administration?” asked Representative Peter Roskam, an Illinois Republican, during a House oversight hearing on Tuesday featuring Marilyn Tavenner, a top US official overseeing the law’s roll-out.

Tavenner, the administrator of the US Centres for Medicare and Medicaid Services (CMS), apologised for problems with but quickly came under fire about the Americans losing their current coverage plans.

Hours after Tavenner testified, the House Oversight and Government Reform Committee released a September 6 status report from Obamacare contractor CGI Federal that warned of potentially severe performance risks less than a month before the roll-out. The report was dated four days before CGI and other contractors told Congress the project was on schedule to open.

Health and Human Services Secretary Kathleen Sebelius, who has faced Republican calls for her resignation, is scheduled to testify before another House panel on Wednesday and will likely confront similar questions about whether the administration misled the public about the benefits of Obamacare.

Obama is heading to Boston, Massachusetts, on Wednesday to promote Obamacare at the same spot where Mitt Romney signed Massachusetts’ own healthcare law in 2006 as governor. Obama is expected to highlight how Massachusetts’ health overhaul, which relied on similar insurance exchanges, also got off to a slow start.

The people at risk for policy cancellations are a portion of those in the pool of 15 million consumers, often self-employed, who do not get coverage through their employers or the government and have individual policies.

The dropped policies are also reviving debate on a core premise of the healthcare law – that all Americans should have adequate coverage so that the costs of healthcare are spread across the population.

Democrats are also saying Obama could have phrased his plan more accurately. “I think preciseness would have been better,” House Minority Whip Steny Hoyer, the second-ranking Democrat in the House, told reporters.

“The real problem stems from the colossal failure to deliver what this law promised the American people.”
Texas Representative Republican Sam Johnson

Obama in 2009, while building support for the bill that would become the Affordable Care Act, or Obamacare, repeatedly said Americans who liked their doctors or current healthcare plans could keep them. He reiterated the promise as recently as March.

Now that the law is fully coming into effect, Americans are receiving notifications from their insurers that their current plans cannot continue because they do not cover certain “essential” benefits such as preventive care and mental health services as required by the law.The idea was to phase out bare-bones plans that do not cover catastrophic events, sometimes to the surprise of the consumer, and also have the effect of increasing costs across the healthcare system.

When asked by a reporter on Tuesday whether Obama misled the public, White House spokesman Jay Carney redirected the conversation to state that it was not fair for taxpayers to absorb costs of the uninsured or under-insured.

“There was a debate about this and I’m sure there will continue to be a debate that a fundamental premise of the Affordable Care Act is that there ought to be minimum standards for insurance coverage for everybody,” Carney said.

But some Americans are reporting shock about the new plans their insurers are offering.

Kevin DeLashmutt, 53, who is self-employed in real estate in Seattle, Washington, said that over the summer he received a letter from his insurance company saying the plan he now has is no longer available.

The cheapest plan he could buy would cost US$411, about twice his current premium, while the plan most like the one he has would cost about 150 per cent more at US$542.59.

“You used to be able to choose what to get based on what you need and what you can afford, including a high deductible,” DeLashmutt said. “Let me manage my own risk. Those people in Washington shouldn’t get to make that decision for me.”

It is unclear exactly how many Americans may lose their current coverage and whether they truly will be forced into more expensive plans.

The law does protect plans that were created before the March 2010 law and have not changed since then, but it is common industry practice for insurers to tweak plans year to year, leading to a flood of cancellations.

These people can either seek new “off exchange” policies from insurers, or try to find cheaper plans through the exchanges that come with a federal tax subsidy if their income is low enough.

If the glitches in the online marketplaces fail to be resolved, the government might have to reinforce low-tech alternatives such as call centres and paper applications, one expert said.

“If they can’t enrol before the end of this year ... it’s a serious burden on those people,” said Joel Cantor, a public policy professor at Rutgers University who advises New Jersey on issues with the healthcare law.

Republicans have been able to harness the frustration to energise their latest attack on Obamacare.

“The problems don’t stop at the technical failures of a website,” said Representative Sam Johnson, a Republican from Texas, at the oversight hearing on Tuesday. “The real problem stems from the colossal failure to deliver what this law promised the American people.”