Kaiser Health News has the best explanation of how and why insurers can cancel policies in the individual health insurance market. Excerpts:
News that health insurers are ending the policies of what could be millions of Americans has rattled consumers and added to the debate over the health care law.
If you or a family member has been notified that your individual policy is being cancelled at year’s end, you may be stunned and upset.
No one knows how many of the estimated 14 million people who buy their own insurance are getting such notices, but the numbers are substantial. Some insurers report discontinuing 20 percent of their individual business, while other insurers have notified up to 80 percent of policyholders that they will have to change plans.
Q. Why are premiums changing?
A. Under the old rules, insurers could decide whether to accept you – and how much to charge -- based on answers to dozens of medical questions. You no longer have to fill out those forms. Starting Jan. 1, insurers can no longer charge women more than men, reject people who are sick or charge them more and can charge older people only three times more than younger ones. They’re also adding new benefits.
As they drew up the rates for 2014, insurance firms had to make educated guesses about how many customers would stay, how many new ones they would attract – and what the health conditions of those new members might be. Actuaries say the new rules on how much insurers may vary rates level the playing field, making premiums more of an average. Older buyers or those who had above-average health problems – and whose former rates reflected those problems – may find their premiums going down. Younger or healthier people, on the other hand, may find premiums going up, sometimes sharply. Under the new rules, consumers “are not paying based on their own health status, but an average health status,” said Robert Cosway, an actuary with consulting firm Milliman. “The positive side is that people in poor health won’t have to pay as much, but the way you get there is that people in better health have to pay more.”
News that health insurers are ending the policies of what could be millions of Americans has rattled consumers and added to the debate over the health care law.
If you or a family member has been notified that your individual policy is being cancelled at year’s end, you may be stunned and upset.
No one knows how many of the estimated 14 million people who buy their own insurance are getting such notices, but the numbers are substantial. Some insurers report discontinuing 20 percent of their individual business, while other insurers have notified up to 80 percent of policyholders that they will have to change plans.
Q. Why are premiums changing?
A. Under the old rules, insurers could decide whether to accept you – and how much to charge -- based on answers to dozens of medical questions. You no longer have to fill out those forms. Starting Jan. 1, insurers can no longer charge women more than men, reject people who are sick or charge them more and can charge older people only three times more than younger ones. They’re also adding new benefits.
As they drew up the rates for 2014, insurance firms had to make educated guesses about how many customers would stay, how many new ones they would attract – and what the health conditions of those new members might be. Actuaries say the new rules on how much insurers may vary rates level the playing field, making premiums more of an average. Older buyers or those who had above-average health problems – and whose former rates reflected those problems – may find their premiums going down. Younger or healthier people, on the other hand, may find premiums going up, sometimes sharply. Under the new rules, consumers “are not paying based on their own health status, but an average health status,” said Robert Cosway, an actuary with consulting firm Milliman. “The positive side is that people in poor health won’t have to pay as much, but the way you get there is that people in better health have to pay more.”
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