THE BLOG
07/22/2013 04:04 pm ET Updated Sep 21, 2013

Here's How Insurers Are Trying to Trick You Out of Consumer Protections in Obamacare

Bookmark this column and read it whenever an insurance company's feel-good TV commercial tries to convince you its bosses care as much about your health as they do about next quarter's profit margins.

I can assure you they don't. Here's the most recent evidence.

As we get closer to January 1, when some of the most important consumer protections in the new health care law kick in, insurance industry executives are engaging in a practice they call "prairie dogging" to hold on to the profitable status quo for another year. In this case, small businesses, like prairie dogs, are sticking their heads out of the ground -- making themselves vulnerable -- in response to a commotion made by predators, in this case insurance companies.

I first heard about this several weeks ago. Aetna had been encouraging some of its small business customers -- whose policies come up for renewal at the beginning of 2014 -- to renew their policies in December instead of January. By taking advantage of this one-time-only offer, those Aetna customers will be able to delay complying with the law -- and providing new consumer protection to their workers -- until the last month of 2014.

Under the Affordable Care Act, policies that take effect on January 1, 2014 must reflect new regulations that are popular with the public -- but that insurance executives worry might squeeze their profit margins. Starting on that day, insurance companies will no longer be able to charge women more than men or to charge people who've been sick in the past more than healthier folks. And they won't be able to gouge older policyholders as much as they do today or refuse to sell coverage to anyone willing to pay for it. They'll also be limited on how much they can make policyholders pay out of their own pockets through deductibles and coinsurance, and they won't be able to sell policies that provide paltry coverage.

Insurance executives hate those new restrictions because the discriminatory practices they've been allowed to engage in for years have enabled them to pad the bottom line. They've been lobbying since the law was passed three years ago to weaken the consumer protections they despise the most, which is all of them. They haven't been successful, but their loophole hunters have found a way to postpone the financial hit.

I've heard from consumer advocates that many insurers are following Aetna's lead. They're sending letters to customers -- at least to the ones with a young and healthy workforce -- encouraging them to cheat their employees out of the Affordable Care Act's protections for several more months. And they're using the same tactics political advertisers use to spread fear, uncertainty and doubt (a.k.a. FUD).

Here are the first sentences of one such "Dear Valued Client" letter that was forwarded to me by a consumer advocate whose father-in-law owns a small business in Florida:

Thank you for choosing to renew with AvMed Health Plans. As your trusted health care advisor, we want to give you an update on how the upcoming 2014 Affordable Care Act (ACA) mandates may affect you and how you can reduce rate uncertainty and possible disruption. Although the impact on each group will vary, it is expected that factors such as essential health benefits, maximum plan deductibles, the application of new taxes and fees, and new rating rules may drive insurance premiums up substantially for some small groups. (Emphasis added.)

Please note that AvMed has an early renewal option available to you regardless of your 2014 renewal date. For example, if you have a renewal date of January through June 2014, you can change your effective date to December 1, 2013 and keep rate stability through December 1, 2014.

The letter goes on to advise the small business owner that if he wants to take advantage of the special renewal offer, he'll have to sign and return a form by August 15. If he does sign the form, however, he'll actually be putting himself at risk of the very rate instability the letter said he could avoid. That's because of this sentence just above the signature line: "I acknowledge and agree that AvMed has the right to underwrite to account for any differences between the existing Contract and a new Contract." In other words, the insurance company reserves the right to jack up the premium as much as it wants if it believes one or more employees might have high medical claims next year.

As the business owner's daughter-in-law noted, the letter seems like a trick.

"It seems that they are trying to delay compliance with 2014 market reforms by 11 months by changing the plan year date and also get him to commit to renewing their plan before he can explore his options in Florida's marketplace by forcing him to decide in the next few weeks."

She's right. It's clear that not only do insurers want to postpone complying with the law, they also are worried that the customers they want to keep might actually find better deals from competitors once the online marketplaces start operations on Oct. 1.

Don't imagine for a minute you can trust these guys to think more about you than about their profits. That's just not the way they operate.