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Sunday, November 10, 2013

The Cost of Obamacare -- Why Existing Health Insurance Plans Are Being Cancelled

The Cost Impact of Obamacare

About 85 percent of the population receive health insurance through their place of employment. The rest of the population either purchases insurance on their own or have no insurance at all. Recently, those who purchase their own insurance have begun to receive cancellation notices on their existing policies. Why?

Reason for insurance cancellations

The policies are being cancelled because the coverage does not meet what Obamacare considers as an acceptable standard level of coverage under the new law. According to Fox News, as of November 7, 4,200,000 Americans had received health insurance cancellation notices due to Obamacare. Predictions are that this number is expected to go as high as 10 million Americans before the Obamacare enrollment period ends in March. The total number of Americans covered under individual health plans is 15.4 million.

Obama's response? "We're talking about five percent of the population." Well, Mr. President, this is STILL 15.4 million American people.

High cost to enroll under Obamacare

Unfortunately for many, there will be a price to pay for more generous benefits and stronger financial protection. Here's just one example: A woman from Seattle paid $390 a month for a health insurance policy with a $2,500 deductible and $10,000 total out-of-pocket costs. Her option to purchase another policy under Obamacare will cost her an additional $79 a month, the deductible is now $5,000, and the total out-of-pocket expense is down to $6,250 a year.

In this example, the woman does not qualify for subsidies to help her pay for the insurance, so she will end up eating it. It's hard to say how many others will fall into this category, but even with subsidies, it is bound to increase costs for people who cannot afford more health insurance expense.

Cancelled insurers facing a dilemma in replacing their policies

In addition to having their policies cancelled, and facing possible increases in policy costs, these same people are sweating impending deadlines to sign up for new insurance and are unable to do so because of the healthcare website malfunction. IF, and this is a big IF, the website problems are fixed by the end of November, they will have six weeks at most to sign up for new insurance policies.

What happens if the website is not fixed by November 30th is anyone's guess.


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