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Insurance changes ahead, even for happily insured

Copyright © 2013 Albuquerque Journal

Before, during and after the birth of the Affordable Care Act, President Barack Obama repeated one talking point over and over: If you are happy with your current insurance, nothing will change.

The Capital is mirrored in the Capital Reflecting Pool on Capitol Hill in Washington early Tuesday, Oct. 1, 2013. Congress plunged the nation into a partial government shutdown Tuesday as a long-running dispute over President Barack Obama's health care law stalled a temporary funding bill, forcing about 800,000 federal workers off the job and suspending most non-essential federal programs and services. (AP Photo/J. David Ake)Robert Hare was happy with his insurance. So were Gregory Rothrock and his family. Yet, their insurance must change, and it will cost them more money.

The individual insurance plans Hare and Rothrock bought from Presbyterian Healthcare Services will become illegal under the act, also known as Obamacare, starting Jan. 1.

Presbyterian, Blue Cross and Blue Shield of New Mexico, and Lovelace Health Plan all sell individual insurance and have each come up with a strategy to keep individual insurance customers while complying with the ACA.

Presbyterian is offering a new insurance product to the 23,000 members who have purchased an individual plan in the past, but for only one more year. Presbyterian will stop offering that plan after 2014. Those members who don’t want the plan are encouraged to purchase individual insurance on the federal health insurance exchange.

Todd Sandman, Presbyterian vice president of strategy and customer engagement, said the company wanted to offer “a transitional plan” that would let customers who are not ready to try the exchange remain in an individual plan for one more year. Only current members can buy the transitional plan.

Maternity coverage

Hare said his individual plan now costs him $87 a month and has a $5,000 deductible. The new plan will cost $211 and includes benefits, such as maternity coverage, that are required by the ACA but which Hare doesn’t want.

Hare – a single, male, 48-year-old software developer – couldn’t have had that coverage in the past anyway, since none of the companies offering individual insurance in New Mexico provided a maternity benefit.

As for Rothrock, depending on which of the three levels of coverage he chooses, coverage for his family of three could be as much as 360 percent more costly. Rothrock, a 59-year-old independent financial adviser, said he also doesn’t have any use for ACA-required maternity coverage, since his wife is 52.

“What’s this about being able to keep your own insurance if you like it?” he asked.

Lovelace Health Plan, which has 2,900 members covered through individual plans, is simply going to cancel the plans at year’s end and work to get people to buy ACA-compliant individual products on the exchange or directly from Lovelace.

Complying immediately

“We felt we’d just immediately comply with all the provisions” of the act, said Lovelace Health Plan Chief Programs Officer Marlene Baca.

Blue Cross and Blue Shield of New Mexico is confronting the issue somewhat differently. The company has 18,000 individual members in what are known as grandfathered plans. These are plans that were in place before March 2010, when ACA became law, and are not required to meet the act’s coverage requirements, known as essential benefits, provided Blue Cross does not change any of the benefits offered in those grandfathered plans.

Another 10,000 are in individual plans that were offered after March 2010. These nongrandfathered plans already meet ACA coverage requirements.

Blue Cross will continue offering the grandfathered plans for the foreseeable future, but nongrandfathered plans will be required to meet ACA actuarial requirements in 2014. In simplest terms, that means the plans have to be designed to cover a minimum of 60 percent of the customer’s medical costs.

They must also stop medical underwriting of individual plans, which means they can no longer refuse to sell insurance to people with medical problems. They must instead guarantee they will issue insurance to everyone regardless of health status.

Beating Jan. 1 deadline

Blue Cross will skirt these requirements by changing the renewal date of nongrandfathered plans to Dec. 1. Plans in effect on that date don’t have to comply with ACA actuarial and guaranteed issue rules until Dec. 1, 2014.

Blue Cross will cancel the nongrandfathered individual plans Dec. 1 next year and encourage members to buy exchange and other products. No new members will be accepted into existing individual plans.

Janice Torrez, vice president of external affairs, said the plan will cost 9.2 percent more than it does this year, but that includes ACA-required fees.

“The plan gives those members just a little bit more time,” Torrez said. “We knew there’d be a lot of questions and confusion. These folks will have more time to decide whether to go to an exchange product, to go off the exchange, or stay put for a while.”

Companies that offer individual plans have struggled for years to make money with them while controlling premium increases. Presbyterian and Blue Cross have raised premiums on these plans more than 20 percent in some years.

‘Very costly’ plans

“This book of business is very costly,” Torrez said, noting the 9.2 percent premium increase doesn’t cover the escalation in health care costs.

Sandman said that even without ACA coverage requirements going into effect in Presbyterian’s new offering, premiums would have increased in the coming year simply because the cost of medical care for members has been increasing.

Over time, Blue Cross expects members to drop even the grandfathered plans. Torrez said most have remained in those plans, despite ever-rising prices, because they couldn’t get an insurance company to sell them another less expensive product.

These members will likely find that new ACA-compliant products are better and less expensive, Torrez said, especially if they qualify for subsidies offered by the federal government to purchasers earning as much as 400 percent of the federal poverty level.