October 31, 2013

Deborah Cavallaro got a letter from Anthem Blue Cross which stated, “Because of the requirements of the new laws, we can no longer offer your current Anthem policy.”

Deborah Cavallaro was all over the news on Wednesday as an example of someone who lost her existing health insurance thanks to Obamacare. Except one problem -- the plan she qualifies for is better. Under her current plan, she is limited to two doctor visits a year, pays $293 a month with a yearly deductible of $5,000. Cavallaro says she was told by her insurance broker she would be paying $478 a month -- but she didn’t check the website herself. There, she would have found a better plan, with only a $2,000 deductible and all doctor visits covered by a copay...for only $40 more a month.

Cavallaro told CBS Los Angeles that she received a letter from Anthem Blue Cross which stated, “Because of the requirements of the new laws, we can no longer offer your current Anthem policy.”

“I was infuriated, totally infuriated,” she said. “It’s sort of forcing you to walk the plank.”


"The letter also said that Cavallaro is being offered a new policy and her monthly payment will increase from $292 to $484.

“The president kept saying, you know, ‘If you like your plan, you can keep your plan. Your premiums will be going down.’ But, in fact, the letter is completely contradictory to that,” said Cavallaro.

Jamie Court, the president of Consumer Watchdog, said major health insurance companies are simply taking advantage of the confusion surrounding the new health care law to engage in price gouging.

“This is not the fault of the Affordable Care Act or President Obama. This is the fault of the insurance company. This is a handful of insurance companies that have convinced a very gullible state agency, Covered California, to allow them to drop plans that could very easily…with a few little tweaks… be compliant under the Affordable Care Act, and people wouldn’t have to leave their plans,” said Court."

Michael Hiltzik at the LA Times talked with Cavallaro, 60, after her CNBC appearance:

"Her current plan, from Anthem Blue Cross, is a catastrophic coverage plan for which she pays $293 a month as an individual policyholder. It requires her to pay a deductible of $5,000 a year and limits her out-of-pocket costs to $8,500 a year. Her plan also limits her to two doctor visits a year, for which she shoulders a copay of $40 each. After that, she pays the whole cost of subsequent visits.

This fits the very definition of a nonconforming plan under Obamacare. The deductible and out-of-pocket maximums are too high, the provisions for doctor visits too skimpy.

As for a replacement plan, she says she was quoted $478 a month by her insurance broker, but that's a lot more than she'll really be paying. Cavallaro told me she hasn't checked the website of Covered California, the state's health plan exchange, herself. I did so while we talked.

Here's what I found. I won't divulge her current income, which is personal, but this year it qualifies her for a hefty federal premium subsidy.

At her age, she's eligible for a good "silver" plan for $333 a month after the subsidy -- $40 a month more than she's paying now. But the plan is much better than her current plan -- the deductible is $2,000, not $5,000. The maximum out-of-pocket expense is $6,350, not $8,500. Her co-pays would be $45 for a primary care visit and $65 for a specialty visit -- but all visits would be covered, not just two.

Is that better than her current plan? Yes, by a mile.

If she wanted to pay less, Cavallaro could opt for lesser coverage in a "bronze" plan. She could buy one from the California exchange for as little as $194 a month. From Anthem, it's $256, or $444 a year less than she's paying now. That buys her a $5,000 deductible (the same as she's paying today) but the out-of-pocket limit is lower, $6,350. Office visits would be $60 for primary care and $70 for specialties, but again with no limit on the number of visits. Factor in the premium savings, and it's hard to deny that she's still ahead."

Hiltzik notes that "The sad truth is that Cavallaro has been very poorly served by the health insurance industry and the news media. It seems that Anthem didn't adequately explain her options for 2014 when it disclosed that her current plan is being canceled. If her insurance brokers told her what she says they did, they failed her. And the reporters who interviewed her without getting all the facts produced inexcusably shoddy work -- from Maria Bartiromo on down. They not only did her a disservice, but failed the rest of us too."

Excellent journalism, Mr. Hiltzik.

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