Starting in 2014, some people who have individual health insurance policies will have to pay more for a new policy that meets Obamacare’s tighter standards. However, there are also some people who are simply being fed a line by their insurance company, which wants to sell them a more expensive policy and doesn’t feel like telling them that better options might be available. Dylan Scott reports on the experience of a woman in Washington who got a letter from LifeWise telling her that they planned to automatically enroll her in a new plan that cost $300 per month more than her existing plan:
Under the new LifeWise plan, Donna would have to pay more than $1,000 a month, a nearly $300 per month increase and a huge hit for a family with an income around $40,000. It was bare-bones coverage by ACA standards, with a $6,350 deductible.
….Fast forward a month, and Donna was able to log onto Washington’s marketplace and shop for insurance. And what did she find? Options. A LifeWise plan with the same deductible they offered her outside the exchange was a little cheaper. Plans with a lower deductible had the same or lower premiums as the LifeWise plan. What she ended up buying was a plan through Community Health Plan of Washington with a $250 deductible.
And crucially, she also discovered she would qualify for a federal tax subsidy that would knock her monthly premium to $80. Her daughter could enroll in Medicaid, at no cost to the family.
So here’s the bottom line: If Donna had taken the default option that LifeWise offered outside of the marketplace, she would have paid nearly $1,000 more per month for a worse plan than she was able to obtain on the marketplace.
Higher premiums for some individual policy holders is a legitimate story. But so is this one, and I’ll bet it’s a hundred times more common.