Newest ObamaCare failure: Automatic renewals

posted at 1:21 pm on July 28, 2014 by Ed Morrissey

ObamaCare advocates have spent the summer trying to put the sunniest spin possible on the law, and they’d better make the best possible use of the time. Premium increases will hit in the fall as insurers adjust for the less-than-optimal additions to the risk pools in 2014, and the best that advocates can argue is that the average increase percentage might just barely avoid double digits. That, National Journal notes, was the the pace of premium increases without ObamaCare, too; so much for bending cost curves downwards, eh?

This fall, though, it won’t be business as usual for ObamaCare policyholders in another important way. Most people assume that their existing policies will automatically renew, and after all the struggles that these consumers had in getting enrolled the first time around, they had to be looking forward to avoiding the process for 2015. And they’re right about autorenewal, but they’re in for a big surprise about what it means:

If you have health insurance on your job, you probably don’t give much thought to each year’s renewal. But make the same assumption in one of the new health law plans, and it could lead to costly surprises.

Insurance exchange customers who opt for convenience by automatically renewing their coverage for 2015 are likely to receive dated and inaccurate financial aid amounts from the government, say industry officials, advocates and other experts.

If those amounts are too low, consumers could get sticker shock over their new premiums. Too high, and they’ll owe the tax man later. …

But unless the administration changes its 2015 approach, “they’re setting people up for large and avoidable premium increases,” said researcher Caroline Pearson, who follows the health law for the market analysis firm Avalere Health.

It could be a new twist on an old public relations headache for the White House: You keep the health plan you like but get billed way more.

What happened? The autorenewal process does work, but for those getting subsidies (about 80% of all ObamaCare enrollees), the calculations change on two levels. Subsidies are based on income levels, which change from year to year for most people, and the exchange systems have no back end to recalculate the subsidies. That means some of these people will either get shortchanged and pay more than required for their premiums, or their insurers will get overpaid, which leaves the taxpayer on the hook to make up the difference at the end of the year. Talk about surprises.

But that’s just the part that taxpayers might be able to control if the system allowed for updates on income. Subsidies are also calculated on certain benchmarks of community pricing within the exchanges, a formula that will change significantly as premiums shoot up this fall. How do taxpayers calculate and plan for that? The simple answer is: they don’t. No one will know the benchmarks until later, which means a lot of people who autorenew will get a shock when they file their tax returns.

It’s worth pointing out that employer-based and individual-market plans increased in prices before ObamaCare, and employers often adjusted their contribution on an annual basis, even with an “autorenewal” (although most employers require workers to re-enroll each year because of that). However, until ObamaCare came along, consumers knew what the costs were up front — and the change didn’t involve getting socked with a big bill from the IRS.

At the same time that consumers get socked with higher prices on the premium side, they’re also discovering as the year wears on that getting health insurance is not the same as getting access. The narrowed provider networks have cut many off from their doctor of choice, and in some cases from any provider at all:

Both women unwittingly enrolled in policies with limited networks of doctors and hospitals that provide little or no payment for care outside those networks. Such plans existed before the health law, but with its expansion of insurance, they are covering more people — and some are shrinking enrollees’ options further than before. The policies’ limitations have come as a surprise to some enrollees used to broader job-based coverage or to plans they held before the law took effect.

“It’s totally different,” said Pippenger, 57, whose new Anthem Blue Cross plan doesn’t pay for any care outside its network, although the job-based Anthem plan she had last year did cover some of those costs. “Now I can’t find a doctor.”

Consumer groups argue many enrollees were misled. In California, consumers filed class-action lawsuits against some insurers, alleging they were given inaccurate information about their plans’ limitations and about which doctors and hospitals participate in them. …

Other insurers made similar decisions, offering managed care plans as the only choice for residents buying through the new marketplaces in entire counties in Indiana, Georgia, South Carolina, Virginia, Florida, Wisconsin and Mississippi, according to government data analyzed by Kaiser Health News. Nationally, 43% of mid-level “silver” plans offered in California, New York and 34 states using the federal marketplace have no coverage outside their networks, a study by the American Cancer Society Cancer Action Network found.

“They’re all doing it,” says Wall Street analyst Ana Gupte of Leerink Swann, an investment bank. “Obamacare is putting pressure on their margins, so they’re on the hook to moderate costs.”

As Robert Heinlein once famously said, “There ain’t no such thing as a free lunch.”

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Fail-o

faraway on July 28, 2014 at 1:26 PM

Keep polishing that turd, Democrats!

Throat Wobbler Mangrove on July 28, 2014 at 1:35 PM

So if state exchanges are the only applicants eligible to get subsidies, what happens to those that were not supposed to get the subsidies? They get a massive bill for back payments? Retroactive insurance cancellations? Am I the only one wondering when the sh!t hits the fan?

libbyscooter on July 28, 2014 at 1:36 PM

Surely the IRS can help the HHS fix these computer glitches….

*snicker*

workingclass artist on July 28, 2014 at 1:37 PM

But these Obamacare posts are about whistling past the graveyard, by next Novemeber Democrats will be openly running on the ACA. Mark my words.

libfreeordie on December 20, 2013 at 10:14 AM

Schadenfreude on July 28, 2014 at 1:39 PM

Shhhhh…..we don’t talk about obamacare around here anymore.

everdiso on July 22, 2014 at 1:27 PM

The Schaef on July 28, 2014 at 1:42 PM

My insurance had gone up 58% in last three years and we are pleased to find out it will only go up by another 12% to be in full compliance.

My only question…. is the $2500 savings I’m supposed to get be in check form or cash?

Ditkaca on July 28, 2014 at 1:45 PM

I think the chick in the photo needs a name.

How about Jennifer.

22044 on July 28, 2014 at 1:48 PM

Some things are a surprise.
This isn’t one of ‘em.

rogerb on July 28, 2014 at 1:51 PM

I bet it’s harder to cancel your Obamacare than it is Comcast.

“Sir, we are sending our “cancellation squad” to your home. They will be there around 3AM”…

ConstantineXI on July 28, 2014 at 2:00 PM

The Dims’ $h!t sandwich. They’ll eventually force all of America to take a nice big, sloppy bite.

They of course won’t have to though, they’re “exempted”.

Meople on July 28, 2014 at 2:01 PM

The Dims’ $h!t sandwich. They’ll eventually force all of America to take a nice big, sloppy bite.

They of course won’t have to though, they’re “exempted”.

Meople on July 28, 2014 at 2:01 PM

Shut up Peasant. Do not question the Nobility.

ConstantineXI on July 28, 2014 at 2:02 PM

Can we get an estimate from the universe’s smartest regime ever on what decade the web site might actually be functional and secure? The 2020s? 2030s? 2040s?

jukin3 on July 28, 2014 at 2:03 PM

I bet it’s harder to cancel your Obamacare than it is Comcast.

“Sir, we are sending our “cancellation squad” to your home. They will be there around 3AM”…

ConstantineXI on July 28, 2014 at 2:00 PM

They must have put those procedures in place after I dumped them, because my cancellation when pretty much like this…

Comcast window licker: And why are you wanting to cancel your service after having it for so long?

Meople: Because Comcast is owned by a bunch of America-hating, anti-Christian, baby murdering Marxists and I refuse to give them any more of my money.

Comcast window licker: *dead air for a good 30 seconds or so*…ok.

I got a good chuckle out of that.

Meople on July 28, 2014 at 2:07 PM

A feature, not a bug.

(You’re not supposed to live up to renewal time.)

Tsar of Earth on July 28, 2014 at 2:09 PM

A feature, not a bug.

(You’re not supposed to live up to renewal time.)

Tsar of Earth on July 28, 2014 at 2:09 PM

Yes, wait until people get a load of the myriad of “secret lists” ObamaTurd will have scattered all through it.

Everyone thinks the VA lists were bad? ObamaTurd will be 1000x worse.

Meople on July 28, 2014 at 2:11 PM

Am I the only one wondering when the sh!t hits the fan?

libbyscooter on July 28, 2014 at 1:36 PM

It’s not really a sh!t and fan paradigm.

It’s more like the constant churn of the propeller in the old milkshake machines.

Tsar of Earth on July 28, 2014 at 2:12 PM

We have to pass the law so that you can see what’s in it!

GarandFan on July 28, 2014 at 2:20 PM

Will “sign-ups” that are still completely FUBAR be auto-renewed? How about the ones that have never been paid? Or the redundant ones?

forest on July 28, 2014 at 2:21 PM

What about the shock when they got it through the feds and the subsidies no longer apply because it’s not a State exchange? Do they then owe the subsidies they’ve already gotten back?

UnderstandingisPower on July 28, 2014 at 2:24 PM

What about the shock when they got it through the feds and the subsidies no longer apply because it’s not a State exchange? Do they then owe the subsidies they’ve already gotten back?

UnderstandingisPower on July 28, 2014 at 2:24 PM

It’s the IRS, the SWAT teams are already gearing up, getting ready to pay them a visit.

Meople on July 28, 2014 at 2:31 PM

Under Obama and the fascist-democrat rule citizens of the USA got a terrible screwing. Other country’s citizens got their wishlist tickets punched.

Obama hates America and he hates her citizens even more.

jukin3 on July 28, 2014 at 2:32 PM

I think the chick in the photo needs a name.

How about Jennifer.

22044 on July 28, 2014 at 1:48 PM

How about Julia. Wasn’t she the one in the Dems cartoon about living off the government all through her life???

txdoc on July 28, 2014 at 2:35 PM

Part of the problem of narrowed physician panels is the number of us who want NOTHING to do with new enrollees through ACA, and do not accept new patients with O’care plans.
It is particularly widespread, I am told, in California. Where nearly everyone enthusiastically supported Dear Leader, and his plans for healthcare.

Actions? Meet Consequences. Consequences? Actions. Here’s a topic: “Poor choices“. Discuss!

orangemtl on July 28, 2014 at 2:37 PM

it’s a terrible thing to say but only great pain will prompt repeal of this law. People will only bring torches and pitchforks when THEY are personally impacted. A lot of people will have to get hurt in order to kill this monstrosity. God help us all.

warmairfan on July 28, 2014 at 2:39 PM

“It’s totally different,” said Pippenger, 57, whose new Anthem Blue Cross plan doesn’t pay for any care outside its network, although the job-based Anthem plan she had last year did cover some of those costs. “Now I can’t find a doctor.”

If she’s an Obama voter, I don’t want to hear it. Pay the bill and quit whining. You wanted him, you got him.

TulsAmerican on July 28, 2014 at 2:56 PM

How about Julia. Wasn’t she the one in the Dems cartoon about living off the government all through her life???

txdoc on July 28, 2014 at 2:35 PM

Julia works for me…I don’t think she’s taken by any of the other reused stock photos. :)

22044 on July 28, 2014 at 3:03 PM

“If you like the cost of your health insurance, you can soon pay more for your health insurance.”

Meremortal on July 28, 2014 at 3:03 PM

My premium just jumped by more than 20%….when do we get that $2500 annual savings? Thank you Dear Leader.

d1carter on July 28, 2014 at 3:06 PM

How about Julia. Wasn’t she the one in the Dems cartoon about living off the government all through her life???

txdoc on July 28, 2014 at 2:35 PM

Julia works for me…I don’t think she’s taken by any of the other reused stock photos. :)

22044 on July 28, 2014 at 3:03 PM

I think she works for fox. Hannity had a woman last fall trying to sign-up for crapcare during his show.

wifarmboy on July 28, 2014 at 3:16 PM

It’s-supposed-to-fail.

jnelchef on July 28, 2014 at 3:18 PM

it’s a terrible thing to say but only great pain will prompt repeal of this law. People will only bring torches and pitchforks when THEY are personally impacted. A lot of people will have to get hurt in order to kill this monstrosity. God help us all.
warmairfan on July 28, 2014 at 2:39 PM
God is helping through some tough love it will hurt but the US needs this no free lunch lesson.

sorrowen on July 28, 2014 at 3:37 PM

My prediction is that not one person will actually be required to pay back any over-payment in their subsidies. Sending a “you owe us money” bill to a new group of “entitled” voters is the antithesis of what the Democrats do. Watch for President Pen to whip it out and give everyone a pass until after the 2016 election.

natasha333 on July 28, 2014 at 4:30 PM

Some people may run into problems on this, but “income levels, which change from year to year for most people” is just not true.

In the pre-Obama days, perhaps “most people” got annual raises – but even then only a very few would change enough to alter their subsidy level under ObamaCare.

There are many fatal flaws in the PPACA, this is a pimple on the inside of Kate Upton’s little toe, relatively speaking.

Adjoran on July 28, 2014 at 4:57 PM

It’s like the Mob, Islam or the Hotel California.

You can check out, but you can never leave.

formwiz on July 28, 2014 at 6:41 PM

All of this is going exactly to plan. When Justice Roberts made it a tax, that was a swinging strike for the Administration but fear not commrades, the failure of O-care as its written only leads to the homerun swing towards single-payer!

ManWithNoName on July 28, 2014 at 8:51 PM