Without Oversight, TX Health Insurers Duping Customers Into Paying More

Since start of the Affordable Care Act rollout on October 1, one thing we've heard a lot about are insurance cancellations, as people discover that their current policies aren't compliant with the new health care law. Many people have been surprised to receive letters from their insurance companies informing them that the cancellation of their non-compliant policies means they'll soon be forced to pay much higher premiums for coverage.

But just because an insurance company has been saying it may not necessarily mean it's true.

The state of Texas has been overseeing the implementation of the Affordable Care Act much with a very hands-off approach. And that means that insurance companies have been able to get away with a lot more here than in other places. People who are getting cancellation letters from their insurance providers are ususally not getting the full story.

This week, KUT told the story of Carl Bergquist, an Austin man who received a letter in September from his health insurance provider, Aetna, informing him that his insurance plan would be ending on December 31 because it didn't meet the new rules of the Affordable Care Act. Bergquist was told that he had two options: purchase a plan with identical coverage for one more year at the price he's paying now, or switch to a new ACA-compliant policy that will cost him nearly three times as much. If he didn't act, Aetna would automatically enroll him in the more expensive plan.

Aetna presented Bergquist with a narrow set of choices, and made it seem as though these were the only two options available to him. That wasn't actually the case.

In Texas, many insurance companies have been misleading consumers who currently hold plans that don't comply with the Affordable Care Act's rules. They're blaming President Obama for policy cancellations (when they're the ones who knowingly sold non-compliant plans in the first place). And they're making consumers believe that they have no choice but to enroll in exorbitantly more expensive plans by default.

In fact, many people who are purchasing insurance plans on the individual market could get cheaper coverage through the health insurance marketplace. This is especially true for people who may be older or sicker, who can no longer have their pre-existing conditions held against them. Younger people who have cheaper - albeit less comprehensive plans - may pay higher premiums but they'll also get better coverage.

The reason that insurance companies have been allowed to get away with misleading their customers is because Texas is regulating the Affordable Care Act much less than many other states. For example, California has been overseeing the implementation of the ACA much more closely. As Sam Richardson of the LBJ School of Public Affairs told KUT, "California set up its own exchange and said that it would not allow policies to continue passed Jan. 1 if they weren't complaint with the coverage regulations under the Affordable Care Act." This meant that while Californians may have received more cancellation letters, these were regulated by the state. Moreover, many Californians have been able to purchase new plans successfully on their state-run exchange, unlike in Texas.

In contrast, the Texas Department of Insurance does not regulate if insurance policies comply with ACA or not. This means they also don't keep track of how many people have received cancellation letters. In general, they rarely get involved in cancellations at all, unless the insurance companies give customers less than 60 days to switch policies. So when companies send misleading cancellation letters, they can generally get away with it -- there's no oversight from any regulatory agency. This leaves Texans in the lurch, unaware of the true scope of their options for health insurance.

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