Some Consumers Face Jump in Prices as Old Policies End
Chantel Koerwitz learned from Blue Cross & Blue Shield of Nebraska last month that the health-insurance plan she and her two young children have would be terminated at the end of this year because it doesn't comply with requirements laid out by the new federal health law.
Ms. Koerwitz's high-deductible plan fit the family budget, at $290.97 a month. Now, she said, she faces a 57% bump, to $456.21 a month, for a Blue Cross plan that has a similar deductible but covers more benefits—some of which, like substance-abuse therapy, she said she doesn't need. Choosing that plan, she said, would require her to pare back nonessentials: her kids' extracurricular activities, vacation travel and cable television.
Complicating Ms. Koerwitz's dilemma is the fact that the 39-year-old stay-at-home mother can't access the website of the federally run health-insurance marketplace, where she could shop for a more affordable plan. "It's not fun. I'm waiting. I'm getting angrier by the day," she said.
Ms. Koerwitz is one of millions of holders of individual health policies who are learning they will have to change coverage by the end of the year to comply with the new law. Under the health law, insurers must cover a broader array of benefits that they previously didn't, such as maternity care, annual physicals and mental-health care. Out-of-pocket costs for consumers top out at $6,350 for individuals and $12,700 for families, eliminating the option of choosing high deductibles in return for cheaper premiums.
Many consumers, particularly those who are healthy and don't qualify for government subsidies, will have to pay more—sometimes double their current rates. Peter Fritzinger, a retired 55-year-old business executive who lives in Denver with his wife and three children, got notice in late August that his Humana Inc. HUM -0.48% Humana Inc. U.S.: NYSE $91.21 -0.44 -0.48% Oct. 30, 2013 10:14 am Volume (Delayed 15m) : 72,322 P/E Ratio 9.65 Market Cap $14.34 Billion Dividend Yield 1.18% Rev. per Employee $922,005 10/17/13 UnitedHealth Reports Muted Pro... 09/23/13 Health Insurers Scramble to Ke... More quote details and news » plan would be canceled at the end of the year.
At $585 a month, the plan had struck Mr. Fritzinger as a deal, despite a $22,500 deductible for the family. The new plan Humana is offering, which complies with the health law, costs $1,146 a month, according to a letter from the insurer. The plan covers a broader range of benefits and the costs of any covered medical services beyond $12,600 for the family.
"That's just a staggering increase, and I don't think most families can afford that," Mr. Fritzinger said.
But other Americans may pay a lot less. The oldest and least healthy insurance customers, long charged much higher rates than their healthy counterparts, could see in some cases significant decreases, insurers and policy experts say.
"It depends a lot on whether they were healthy and their age," said Dan Mendelson, chief executive of Avalere Health, an industry consultancy. "Fifty-year-old heart-failure patients are ecstatic because their premiums are going down in this environment."
Insurers issued the first wave of cancellation letters in recent weeks, and some consumers have responded with anger and frustration. Kaiser Permanente, a California managed-care provider, has informed 160,000 members—about half its individual customers in the state—that their plans won't be continued after Dec. 31, said Chris Stenrud, a spokesman. It began notifying customers this summer and is automatically enrolling them in new plans, unless they choose different coverage.
Around 30,000 Kaiser members who were previously covered by a plan with limited benefits will see significant premium increases, he said. The offerings must cover a range of benefits to be compliant with the health law, such as maternity care, surgeries and mental health—things not covered by all current plans.
Blue Shield of California is notifying 119,000 members that their plans will be canceled this year, said spokesman Steve Shivinsky. Those members will be transferred to new plans. Another 90,000 members with individual policies will have the option of keeping their coverage, he said. Those grandfathered plans will eventually be phased out, too, he said.
About two-thirds of Blue Shield customers will see an increase in premiums, Mr. Shivinsky said, ranging from minor to substantial price hikes. The remaining third—mostly people who have historically paid more due to age or health factors—will see premiums decrease, he said.
Rather than pay for the new Humana plan or shop on the insurance exchange, Mr. Fritzinger has chosen a third option: Like some insurance customers, he'll renew his current plan in December, before the health-law provisions go into effect—at the same rate. The health law's changes—and cancellations for some plans—generally go into effect when plans renew after Jan. 1. At the end of next year, Humana told him, he'll have to subscribe to a new plan that complies with the law's requirements.
Giving consumers the ability to re-up or shop for coverage on the exchanges "enables our members to select the option that works best for them," a Humana spokesman said.
Write to Timothy W. Martin at timothy.martin@wsj.com and Christopher Weaver at christopher.weaver@wsj.com
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