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Why Was Your Health Insurance Plan Cancelled and Not Upgraded?

11/08/2013 02:28 pm ET | Updated Jan 23, 2014

So you got a letter from your insurance company saying your plan is being discontinued. And you're mad at President Obama for telling you that if you liked your plan, you could keep your plan because here you are, losing that very plan you liked. Plus your sticker shock at the higher price to replace it has somehow not been assuaged by the subsidies that may drop the actual cost quite dramatically. Regardless of your general disposition toward the president, let's make sure your anger isn't just a little bit misguided.

You do realize that as part of the Affordable Care Act (ACA) a new set of rules were instituted to protect patients and provide a basic floor for included services? It's a Patient's Bill of Rights and it helps people in a myriad of ways, including ceasing to exclude those with pre-existing conditions, ending lifetime limits on coverage, and covering preventative care for men, women and children, the latter whom can now stay on their parents insurance until they turn 26. These rules form a more compassionate foundation for our health care system and are designed to create a stronger framework for how we handle our individual and collective well-being. Many of these new rules are also not included in your old plan, if it was designed before the ACA went into effect on March 23, 2010 and is now considered "grandfathered."

So of course the health care companies had to discontinue your current plan to offer brand new ones that include the more generous benefits. Or did they? Could they have just upgraded your current plan with the new rules and given you a more robust version of your own plan? That way, you would technically be keeping your plan and benefitting from the new ACA rules. You would think insurance companies would be thrilled with all the new business but instead they took the route of mass cancellations that made it seem as if the president was reneging on his earlier promises. Perhaps this is just an issue of semantics, but the important part is that people feel like their plans are being taken away and that plays into a certain narrative. It certainly seems like the insurance industry could have chosen to keep the plan names and upgrade them all but did not. Adding insult to injury (possibly literally) those of us with grandfathered plans are getting letters referring to this nugget from the HHS website:

"A grandfathered health plan isn't required to comply with some of the consumer protections of the Affordable Care Act that apply to other health plans that are not grandfathered."

That's right. With my grandfathered plan, I don't get preventative services or protections when appealing claims and coverage denials or even protection of my choice of health care provider and my access to emergency care. And for an individual with a health care policy, the insurance companies can also keep annual dollar limits on key benefits in place. Plus, they are not required to eliminate pre-existing condition exclusions for children under 19 years old. All of a sudden, those new plans with protections, preventative care and tax subsidies are looking pretty damn good. Yes, President Obama said if we liked our plan we could keep it, but that doesn't mean that after the ACA kicks in we will still like our plan or even want to keep it.

So yes, you can keep your plan if it was grandfathered in and you deem it worthy of the cost versus benefits, without all those pesky protections. But if you're one of those people who's just mad as hell and feels the individual mandate is an onerous tax, let me ask you one simple question: If you didn't have any health insurance and you got injured -- perhaps seriously, a real life-threatening emergency -- where would you go? Assuming your answer is the emergency room, you'd have a lot of company. Americans make almost 130 million ER visits a year, a whopping 42.8 visits per 100 persons, with 13.3 percent overall resulting in hospital admissions. And the ER is a place that is often utilized by those without insurance because by law the ER cannot turn you away or make you pay. By the rights afforded to every citizen of this country in 1996 by the Emergency Medical Treatment and Active Labor Act, the Emergency Room is de facto socialized medicine:

The Emergency Medical Treatment and Active Labor Act (EMTALA) is a U.S. Act of Congress passed in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act (COBRA). It requires hospitals to provide care to anyone needing emergency health care treatment regardless of citizenship, legal status or ability to pay. There are no reimbursement provisions. Participating hospitals may only transfer or discharge patients needing emergency treatment under their own informed consent, after stabilization, or when their condition requires transfer to a hospital better equipped to administer the treatment.

Since 1986, any person -- resident, tourist or undocumented immigrant -- in America has been able to get free emergency care at any ER in the country (thank you, Ronald Reagan!). The rare exemptions are Indian hospitals, veterans hospitals and the Shriners Hospitals for Children, of all places. What if in order to exempt yourself from the ACA mandate you had to sign a waiver that would also exempt you from EMTALA? Even if you were in an accident and were crying for an ambulance, if you were uninsured you could only get one for hire and if you couldn't afford it, well tough! That's the free market for you.

So why hasn't anybody railed against this pervasive form of socialized medicine? Where are the Tea Party protests outside all the ERs in the country? Why is it okay to treat catastrophic injuries with no reimbursement provisions but not catastrophic illness? Or all illness? Those that rail against having to purchase health care may have legitimate beefs against compulsive insurance coverage (like auto insurance) or compulsive protective rules (like seat belts and airbags in cars) but unless they are willing to forego their current socialized emergency care, their protestations against paying towards their own coverage rings hollow. No ACA? No ER for you.

Time will ultimately tell if the ACA is a success or a bump on the road toward universal coverage. The individual experiences of each state will ultimately help guide us with real world examples of what works and what doesn't. For example, in just a few short years, Vermont will be transitioning to a single-payer system. The contrast between that and states like Texas or (26.3 percent of residents uninsured) and Florida (25.35 percent of residents uninsured) who didn't expand Medicaid will be stark and enlightening. Even Pennsylvania may get on board after a study estimated $17 billion of savings for the state under a single payer approach. And Pennsylvania is one of many states considering a single-payer system that can be put into action starting on January 1, 2017, under a provision in the ACA that empowers states by allowing for innovation.

You know what also happens on that date? States can begin allowing large employers and multi-employer health plans to purchase coverage in the health insurance exchange, giving a huge boost to the exchanges in power and numbers. Also by then every single state will offer two federally regulated multi-state plans (one of which must be nonprofit, the other cannot cover abortion) which are already coming to 60 percent of individual state exchanges on January 1, 2014. And that upcoming date more than any other heralds the next big phase of the ACA.

On this upcoming January 1, the ACA really kicks into gear on everything from patients rights to excise taxes on Health Insurance and Pharmaceutical companies. And don't forget the national CO-OP industry adding a nonprofit option to consumers choices (and to the competitive marketplace). Plus, members of Congress and their staff will only be able to purchase health care plans through exchanges or other plans established by the ACA, making them responsible not just for Americans health care but for their own. Read it for yourself to cut through the spin with actual facts and figures.

Remember, we are just over a month in to this transition and nothing on this scale could be expected to work perfectly right out of the box. It's helpful to recall that Social Security began under FDR with the Social Security Act (enacted August 14, 1935) and didn't really mature into its current form until Lyndon Johnson signed the Social Security Amendments on July 30, 1965, also heralding the beginning of Medicare and Medicaid. That's almost 30 years from start to finish, which makes the last month seem like a blip on the radar. Once we get to January 1, we'll see how the law really feels once it's in motion and get a good idea of where we are headed. After that, it will be three more years until we see where the states will lead us in 2017.

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