The Law of Unintended Consequences: Will we have more people uninsured after health care reform than before?

WASHINGTON, Oct. 30, 2013 /PRNewswire-USNewswire/ -- The following is a statement from Jeff Smedsrud, a marketing and business development consultant, with more than 30 years experience in creating consumer-driven health plans. He was recently a senior officer for a large publicly-traded financial services company. He is the chairman of Communicating for America ( a national advocacy association that has championed health insurance reform for decades, most notably by helping establish state-based programs for those denied insurance for medical reasons.

Sadly, fewer Americans could be covered under permanent private health insurance on February 1, 2014, than were on December 1, 2013. Call it a perfect storm of unintended consequences.   We shouldn't let that happen. Here is why it may and what can be done to prevent it.

  1. Many insurers exited the individual major medical market with effective dates of 12/31/13.   Of the 14 million American covered in this market— young and old, healthy and not, rich and poor — about one half will be losing their coverage at the end of 2013.   In California alone, CBS News (Arrival of Obamacare forcing insurers to drop customers with low coverage) reported on 10/24/2013 that at least 160,000 will lose coverage.  From just one insurer.
  2. The insurance companies who exited the individual major market had a disproportionately high penetration in rural markets. Some were smaller, regional carriers without the financial resources or skill set to compete in the new regulatory environment in which there is no medical underwriting, but a there is a new form of risk mitigation called "Risk Adjustors." The new rules stack the deck in favor of the largest insurers, to the disadvantage of small innovative companies.
  3. The New York Times reported on October 23, "Health Law Fails To Keep Prices Low In Rural Areas", that there are very few choices on the Exchanges in rural counties.  A staggering 58% of the counties only have only 1 or 2 plans.  Experts agree that a lack of competition leads to higher prices.
  4. In most states — without considering the savings  a low income consumer may get from premium subsidies — the cost of health insurance will be higher than it had been.  The biggest reason is that the benefits are better — as is required by law.  There are new mandated benefits, more preventative care and wellness, and no lifetime limits on expenses. These come with a big price tag. And remember,  most Americans say the #1 reason they drop coverage is because it is not affordable.
  5. Just as these consequences are taking place, at a time when consumers need to shop for new plans, the roll-out of the Exchanges is a 'train wreck', impacting millions of people. Buyers have been stopped in their tracks.
  6. So what do Americans do?  They improvise.  Like always. They buy short term medical plans because they don't want to be left without any insurance coverage, don't want to show up at the emergency rooms and shift cost to others, don't want to be part of the problem.
  7. There are now an estimated two million Americans ( nearly double from a year ago) covered by short term medical plans, according to experts quoted in a recent Reuters article:  A short term medical plan is good coverage.   Low co-pays.  Coverage with up to $2 million in lifetime benefits.  Moderately low deductibles.  Accepted by nearly all doctors with no 'out-of-network' penalties. And it costs about 1/2 of the new permanent 'Qualified Health Plans' available on the Exchanges.. You can buy short term medical plans at, or, or  
  8. But… it is not permanent insurance, and short term medical does not meet the Affordable Care Act (ACA) definition of 'minimum essential coverage'. Not being classified as acceptable prior coverage means that individuals may not be able to buy permanent coverage in the non-open enrollment periods during 2014.  Having other types of health coverage lets individuals buy when their policy lapses under the 'Special Enrollment' rules of the ACA. 

So, for these reasons — and probably more, including the poisoned political environment in which we live --  fewer Americans might have permanent  health insurance AFTER health care reform is fully implemented than BEFORE.  I hope it is not true.

Here is what can be done right now to make sure it doesn't happen:

  1. The Obama Administration should classify short term medical plans as meeting the requirement of 'minimal essential coverage.'  Given problems at the Exchanges and all the other unintended consequences of health reform, this is clearly good for consumers.  At least tweak the rules for 2014.  And don't make consumers pay a tax penalty just because they bought a short term medical plan because affordable permanent coverage wasn't readily available. Some people want everyone to have 'perfect' coverage.   Let's get them to 'good' coverage as step one.
  2. All Insurance companies should be encouraged to extend their current plans to 12/31/14. Some have  done so.  Although time is running out, this can still happen, particularly if there is cooperation from state insurance  departments, and the regulators at Health & Human Services (HHS). Millions of  people might not need to lose coverage at the end of 2013, giving them extra time to make an orderly transition to new plans. Let's 'grandfather' the plans in place at the end of 2013 for one more year.  Existing plans were 'good enough' for millions of consumers.  Let them keep the plans they had.
  3. HHS regulators should make it easier for licensed agents to help consumers enroll in new plans. Agents are not the enemy. Health insurance is not like buying an airline ticket or booking a hotel room.  We do that thousands of times in our lives.  We buy health insurance — what, maybe 2-3 times? Consumers need qualified help. All hands on deck.
  4. At the same time, it must become priority #1 to get the privately-run insurance exchanges the information they need to calculate subsidies and help enroll consumers. Somehow, the best and brightest minds were left on the sidelines. Let's drop the pretense that government owned exchanges can do it best. After all, who do you trust to deliver what you need on time— Amazon, Federal Express, or the U.S. Post Office? 
  5. And you and I have a role, too.   All of us should reach out to those we know who are struggling to find affordable health insurance and point them to alternatives, like short term medical plans,  or send them to unbiased consumers web sites like, or encourage them to not give up on the Exchanges, especially the private exchanges. Amazing things happen with three simple words: Do not quit.

Health insurance is being reformed, as it should be. America needs more people with coverage.  Let's take some modest steps to bend the rules, improvise, help each other and put the focus where it belongs: What can be done right now -- today -- to get more Americans some form of good health insurance. 

Contact: Benjamin Schierer, (218) 739-3241 x3530, [email protected]

SOURCE Communicating for America

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