Ladies and gentlemen, boys and girls, children of all ages! Please direct your attention to the center ring of the many-ring circus that is the Affordable Care Act roll-out! In that ring you will find insurers merrily mailing out policy cancellation letters to policy-holders in direct contradiction of assurances from President Obama that all who like their insurance could keep it! You will be shocked! You will be appalled! You will rush to condemn the White House for failing to predict such an obvious outcome!
The headlines are aflame with accusations about how President Barack Obama mislead the American people in the lead-up to passage of the Affordable Care Act. He swore up and down that anyone who likes her insurance policy could keep it. As it turns out, that’s not true.
Insurers are discontinuing plans that fail to comply with the coverage mandates of the ACA. Thousands of individual policy-holders are receiving letters telling them their policies will cease to exist and they need to seek out new coverage. The legal reasons for these changes are explained at Think Progress:
The cancellations are a result of so-called grandfather rules promulgated by President Obama’s Health and Human Services [Department]. The rule exempts health insurance plans in existence before March 23, 2010 — the day the Affordable Care Act became law — from many of the new regulations, benefits standards and consumer protections that new plans now have to abide by, but says that policies could lose their designation if they make major changes…
The goal of grandfather regulations is to allow a consumer to keep their existing policies, while also ensuring that there are some basic patient protections built into these plans. If insurers make changes that significantly burden enrollees with lower benefits and increased costs they have to come into compliance with all consumer protections. Therefore, policies lose their grandfathered status if insurers cancel coverage when a person becomes ill, impose lifetime limits on benefits, eliminate all benefits for a particular condition and reduce the cap for covered services each year, among other changes. (In fact, in November of 2010, the federal government loosened some of these standards.)
So yes, individuals can keep the plans they have if those plans remain largely the same. But individuals receiving cancellation notices will have a choice of enrolling in subsidized insurance in the exchanges.
So, this was a predictable outcome. Insurers knew that they were making changes to existing plans that would make them non-compliant with ACA rules and the grandfather clauses but they did it anyway. The result is that they have to figure out how to transition customers off the non-compliant policies and onto ACA-approved policies.
This should not be that hard. There are all kinds of examples of consumer products being phased out and the companies that make them finding helpful ways of transitioning consumers into the newer versions of the products. You can load the new operating system onto an existing device, or purchase parts for old model-year cars, and there’s transparency about how to upgrade to a new model when your gadget or automobile becomes obsolete. Sales and service associates are trained to usher consumers along the product chain and make sure every customer leaves with the right product in hand. It’s part of customer service.
Insurance companies are not experienced in customer service. They are not good at making policy-holders happy. They’ve never had to make them happy before.
For most of us, insurance has always been something we got through an employer and we didn’t have the choice to take our business elsewhere unless we wanted to walk away from the premium cost-sharing employer-based policies offer. For people on the individual insurance market, the choices are limited by what insurers will do to work with a family’s medical needs and by what families can afford. When getting an individual policy, people with even minor pre-existing conditions find that obtaining insurance often amounts to taking what you can get.
Insurance companies have never lived with the threat of defection from dissatisfied customers the way automakers, cell phone companies and cable providers do. They don’t know how to finesse individuals. In other words, their customer service skills suck.
Insurers have known since 2010 that everything they did was leading up to being fully ACA compliant and that their individual customers were about to take on new significance to their business models. Instead of working toward an orderly, customer-centric transition they waited until open enrollment started on the new exchanges and sent form letters with the barest of information about what was happening to old plans and how to get signed up for a new one.
We could speculate for hours about how insurers could have done this better (maybe they could have called Apple for some ideas?), but what’s abundantly clear is that insurance companies have a lot to learn about serving individual customers if they want to develop customer loyalty in the new marketplace.
As for the president’s promise about keeping insurance? It isn’t the first time a politician has oversold his agenda. I doubt it will be the last.
Rebekah Kuschmider is a D.C. area mom with an over-developed sense of irreverence, socialist tendencies, a cable news addiction, and a blog. Rebekah has an undergraduate degree in theater and Master’s in Arts Policy and Administration and a decade of experience managing arts organizations and advocating in the public health sector. Rebekah also blogs about her life, her thoughts, and her opinions at StayAtHomePundit.com. She was voted one of the Top 25 Political Mom Blogs at Circle of Moms. Her work has also been seen at Babble.com , Salon.com, Redbook online, and the Huffington Post.
Photo credit: Morguefile.