The Affordable Care Act was supposed to make getting and keeping healthcare insurance much easier. Instead it has turned the industry upside down causing insurance companies to rethink their policies and forcing existing policy holders to look for new coverage. It is estimated that over 15 million Americans will have to find new coverage because of the cancellation of their existing policies.
So what’s the problem? Insurance companies are refusing to renew older policies for several reasons. First, many of the older policies do not meet the new requirements put forth by the Affordable Care Act. Secondly, older policies would have to be altered to cover more and cost less. And, third, pre-existing conditions must now be covered by new insurance policies.
Insurance companies fear dramatic financial loss if they cannot sell policies to young Americans who are in good health. With the way the ACA guidelines are written, better insurance with cheaper premiums would mean that individuals who are in poor health could purchase policies and then flood the system with claims that could eventually bankrupt the system. Without being able to charge their existing rates, insurance companies feel that they are being put in a position where loss is imminent.
In cases where an existing health condition has prevented a person from getting insurance in the past, insurance companies will be required to cover the costs of treating the condition without having any premiums being paid into the account before its used. Basically, a policy will be knee deep in debt the minute the person signs up for coverage.
Insurance companies who have spent the last few years devising new policies that would meet the guidelines of the Affordable Care Act are cancelling existing policies. Customers are being forced to sign up for policies through state exchanges and are having difficulty finding out the amount of their premiums and other basic information. Because their private policies were canceled, it has become increasingly difficult for state exchanges to even determine if a person qualifies for state subsidies that would make policies more affordable.
A cancellation notice can spell disaster for any type of insurance coverage. It throws several wrenches into the equation and leaves other in the dark as to what went wrong. With the timetable put in place by the ACA, there is little time for state exchanges to sit down with each and every person who has had a policy canceled and determine what their cost will be, the coverage they need and the amount of subsidies they qualify for. Because of this many people are refusing to even attempt to sign up for the new health care plan.
What looked good on paper is turning into a jumbled mess of indecision and doubt on behalf of the taxpayers. Many are being canceled for no other reason than the insurance company not wanting to take the time to adjust their existing policy. Renewals are being canceled because the policy does not meet the standards required by the ACA and state exchanges are left holding the bag with little information and few resources available to modify the situation.