The bungled rollout of Obamacare commands attention in Washington. But out in the real world, a much more serious and long term threat to the program has emerged. Across America, people who now hold private insurance policies are checking out their options, and they don't like what they see. Many are shocked to discover that they can't keep their current policies, and that their new policies will cost more, sometimes much more.
The president said "if you like your health plan, you will be able to keep it," but that's not necessarily true for those who buy private insurance. Nearly 14 million Americans buy health care insurance privately because they don't work or can't get insured through their workplace. Of these, 50 to 80 percent will have their current insurance cancelled.
Why are their policies being cancelled? Because these policies are not good enough to meet the requirements of Obamacare. Perhaps they do not cover everything that Obamacare requires. Perhaps the deductible is too high. These non-compliant policies will be terminated, and must be replaced with new policies. The new policies are more expensive because they are generally more comprehensive, and offer lower deductibles and co-pays. They're better for those who can afford them, but not everyone can.
Some people with private insurance will be able to keep their present policies. Plans set up before March of 2010 are "grandfathered," meaning they can continue even though they don't meet some of the minimum requirements of Obamacare. But less than half of the 14 million privately insured Americans (perhaps as low as 20 percent depending on which so-called expert you ask) enjoy plans that are grandfathered.
Some people – the poor and lower middle class – will get government subsidies to defray the cost of insurance. A single Californian working full time in a minimum wage job would not be required to pay more than 3 percent of his or her income for health insurance. That's a big savings.
So who takes the hit, if some people are grandfathered in, and others are subsidized? The burden falls on privately insured people of middle-income and above who have changed insurance since March of 2010. Most of them will see their insurance costs jump. For example, the LA Times reports a real estate agent in Southern California whose premiums will rise 65 percent. NBC reports a North Carolina resident whose premiums will jump 415 percent. The Covered California website confirms that big hikes are not unusual.
In my case, if my own private policy were not one of the grandfathered ones, I'd have to choose between paying 25 to 100 percent more, or paying roughly the same amount but switching from a PPO to a less desirable HMO.
I support Obamacare overall. It solves the injustice of people being locked out of the insurance market, and takes some small steps towards getting costs under control. But this is political dynamite, and it needs to be defused. Of the 14 million privately-insured Americans, perhaps 5 million will pay significantly more under Obamacare. They will be angry about it, and they will vote. Five million angry votes would have been enough to tip the outcome of three out of the past four presidential elections. No wonder some Democrats are running for cover.
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