Thousands of Americans will soon receive cancellation notices for their health insurance plans compliments of Obamacare.
Thirteen states and the District of Columbia are ordering insurers to discontinue plans previously exempt from Obamacare’s onerous and expensive coverage mandates.
This rash of cancelled policies is only the latest example of the Obama administration’s desire to limit patients’ healthcare choices. Earlier this year, federal officials tried to reduce the number of plans available to seniors through the Medicare prescription drug benefit and establish new rules for what those plans must cover. They failed after an outcry from seniors and elected officials alike.
Seniors value the wide array of choices provided by the Medicare drug benefit and elected officials like that the competition fueled by those choices keeps the program’s cost down.
The episode offers a lesson for the Obama administration. Choice and competition are popular with consumers and effective at keeping a lid on health spending.
Of course, thanks to the administration, tens or even hundreds of thousands of Americans will soon find themselves with one less insurance choice. In Virginia, an estimated 250,000 plans will be cancelled; the same will be true for 60,000 in Connecticut.
Those who lose their policies may have to pay twice as much for coverage. New plans may not allow patients to keep their doctors. Deductibles and out-of-pocket expenses are also expected to increase.
Thousands of seniors were facing a similar predicament back in March, when the Centers for Medicare and Medicaid Services proposed a rule that would have restricted the number of plans an insurer could offer under the drug benefit, Part D. The rule would’ve fundamentally changed the program’s structure and left up to 14 million seniors without adequate prescription drug coverage.
Under Part D, seniors can choose from privately administered drug plans with different levels of coverage and costs. Insurers must compete for customers by offering the best suite of benefits at the lowest price. That competitive ethos doesn’t just put seniors in charge it also holds down costs for taxpayers.
Premiums for Part D coverage have been consistently low. So medication has remained affordable for seniors. Average monthly premiums stayed level between 2012 and 2013, at just $30. Drug costs under Part D have increased just 1.8 percent each year. That’s in line with the general rate of inflation.
The program has proved affordable for taxpayers, too. According to the Congressional Budget Office, costs for Part D from 2004 to 2013 are now an estimated $349 billion or 45 percent lower than originally predicted.
For the past three years, the CBO has lowered its 10-year projection of Part D’s cost by over $100 billion. Further, by ensuring that seniors have access to affordable prescription drugs and thus can adhere to the treatment regimens their doctors prescribe, Part D has delivered savings for the rest of the healthcare system.
According to a recent study in the Journal of American Medicine, after the inception of Part D, nondrug medical spending dropped $1,200 each year for patients who previously had limited drug coverage.
That makes sense. After all, it’s far cheaper to take a cholesterol-lowering pill every day than pay for emergency heart surgery. The March CMS proposal to limit choice in Part D never stood a chance.
Ninety percent of seniors are satisfied with their coverage. And lawmakers have been pleased with the program’s ability to leverage the power of competition to rein in health costs.
Choice and competition have made Medicare Part D both affordable and popular. By canceling hundreds of thousands of in-force insurance plans and thereby reducing choice and competition, the administration has ensured that Obamacare will be neither affordable nor popular.