The Dull Knives Come Out
The Dull Knives Come Out As Anti-Obamacare Forces Falsely Attack California Healthcare Exchange Prices (Part I)
6/01/2013 @ 10:24AM
Earlier this week, I posted an article discussing the rather positive developments in the State of California where the prices for purchasing an individual health insurance policy on the newly organized healthcare exchange came in well below what had been anticipated.
As I was certainly not the only writer in the nation reporting this development, I had little doubt that the voices of those who are, in my opinion, more committed to a political and ideological victory than they are to a healthcare system that allows more Americans access to affordable care, would soon be heard from.
It did not take long.
In response to my article—and the positive reaction on the part of Americans who were finally seeing some good news about the Affordable Care Act after years of an onslaught promising everything from death panels to national bankruptcy—my Forbes colleague Avik Roy published a piece, complete with impressive charts and graphs, boasting a headline that trumpeted some very bad news. Contrary to my assertion, Roy’s headline revealed that the California exchange prices were actually raising the cost of an individual policy by 64 to 146 percent.
As you might expect, Avik’s headline grabbed my attention—as did the early paragraph in his article referencing my own piece when suggesting that, “A bit more analysis would have prevented Rick from falling for California’s sleight-of-hand.”
Having both lived in California for over thirty years and having reason to be particularly focused on health insurance issues—including policy costs—I found any allegation that the rates published by Covered California could raise the existing policy prices by as much as 146 percent to be, to say the least, quite shocking. But then, one must always be open to the possibility that something was missed or a mistake was made.
And so, I read on.
What policies, I wondered, had Avik used as his point of comparison in reaching his startling conclusion?
I soon had my answer as Roy revealed where he had acquired his data, writing, “But in 2013, on eHealthInsurance.com (NASDAQ:EHTH), the median cost of the five cheapest plans was only $92.”
I must admit that it took a moment to sink in as my first reaction was to laugh. eHealthInsurance.com? Seriously?
Was Avik really using teaser rates published on the Internet by eHealthInsurance.com as his point of comparison? I mean, you don’t have to be a healthcare policy expert to know that websites like eHealthInsurance.com always flash low rates in front of you—prices that maybe one person in a thousand might actually hope to achieve—to tickle the interest of a potential customer.
It’s not that the flashing low prices are necessarily false as there is always going to be someone who can qualify for the exceptionally low rate— although even they will often find that the actual details of what is covered and not covered may be far less beneficial than they might hope. You see, while many of us like to describe ourselves as “never having been sick a day in my life”, the reality is that such individuals are extremely rare. Have you ever suffered a migraine headache? If you have, be prepared for a substantial increase over the teaser price stated on a website like eHealthInsurance.com. Ever experience a summer of hay fever? Your rate will skyrocket as a result. Did you have acne as a teenager? Uh-oh..price is going up.
Indeed, you don’t have to be a think tank scholar to know that the policies listed on Internet websites do not give much in the way of detail when it comes to what is actually included or excluded from the policies being hyped. The only way one can have that information is to actually fill out the application for insurance and await the final quote.
Wanting to be fair, it occurred to me that Avik—as a part of his research—had gone through the process of filling out a lengthy eHealthInsurance.com application, submitting it for consideration and then based his comparisons on the results. Certainly, that would be a credible means of acquiring the comparative rates that rest at the heart of his argument.
However, it seemed highly unlikely that there would have had sufficient time to go through the application process to acquire the data given that Roy’s article was published roughly a week after the California rates were published.
To be certain, I spoke with a representative of eHealthInsurance.com to determine how long the application process typically takes from point of submission to acquisition of a quote. I was told that the process involves a minimum of three weeks (as you will see in some of the reviews of eHealthInsurance. com I provide below, three weeks would be quite an accomplishment as it appears that the more typical length of time from filing the application to receiving a real quote is far longer.)
Thus, it appears clear that Avik simply went to the website, took the lowest five prices listed for policies that appeared to “match” the policies on the California exchange (despite the fact that the important details that really inform what a policy does or does not do are completely absent from the eHealthInsurance.com website) and used this material as his point of comparison.
Still, it is my obligation to give someone who disagrees with me the benefit of the doubt—no matter how difficult such generosity may become in the face of reality. In the pursuit of fairness, I went looking for some “real life” data on just how much the listed prices on eHealthInsurance.com could be trusted. After all, if the body of eHealthInsurance.com customers were finding that the teaser rates held up, this would certainly add credibility to Avik’s thesis.
The Dull Knives Come Out As Anti-Obamacare Forces Falsely Attack California Healthcare Exchange Prices
I started my search at epinions.com where I found the following reviews of the eHealthInsurance experience:
“Classic bait and switch tactic used. I submitted a request for insurance and a quoted rate only to have them approve and auto-enroll me in the plan at a rate that was over 150$ more a month than quoted. I never agreed to this higher rate and nothing was specified about this in the agreement, which I read every word of. I took 3 calls of which were over 20 minutes and the worst being over 30 to get a customer rep on the phone. They then give me the direct number to the insurer to cancel and an e-mail template “that you have to copy and paste” to a reply e-mail and fill out so they can submit to the company. This apparently take 10 days to process, so unless you fill this out the moment you get approved (didn’t find out till days later), it will be past the time to cancel the policy without getting charged. Suffice it to say I’ve filled a complaint with the BBB, wasted hours out of my life, hopefully will be able to cancel the policy in the morning and not be charged anything.”
“Their quotes are inaccurate. Actual price of the policies listed on their site will be about fifty percent higher AT LEAST.
I’m talking high deductible plans for people with no health issues what so ever.
Best advice: If you see a plan that seems good, visit that company’s website yourself and check the price. Call them if necessary.
Don’t go by the price on eheathinsurace.com. Wish I hadn’t bothered.
I was looking for a plan to save me money over what I pay now.
Actual price price for policy I wanted was MORE MONEY FOR LESS COVERAGE! I had to wait 5 WEEKS to be informed of that.”
“Beware – They will charge you for the first month’s premium, whether or not they give you the quoted price. My family was quoted a price, but after they reviewed our application they emailed to say they would need to charge more than the quoted price. The crux is that they don’t give you the opportunity to accept or deny the inflated price, instead they withdraw it from your credit card account without notice. I’m guessing they make quite a profit this way. Why can’t they just wait to charge your credit card until you’ve accepted their counteroffer? Probably because most people don’t realize they’ve been charged more than they were quoted until it’s too late…”
“I applied for health insurance was quoted $86.00 policy came back at $125.00, I am a non smoker and haven’t had any doctor needs in over 5 years. That is their prerogative on the rates but the kicker is the hoops you have to jump through if you don’t want the coverage. I had a budget of 110.00 I couldn’t afford the 125, well they charged my card with out telling me the rate was going to increase 35%, so I wake up one morning and have this charge, I call them to say I am not interested and they say the refund will happen in 30 days and to get it I need to write a letter of cancellation and mail it in within 10 days. So let me get this straight, I can do an on line signature for them to run my card for any random amount they decide to charge me but when I don’t agree with ridiculous up charge I have to do a written cancellation and it takes 30 days for the refund. What a scam, now I know the value of my local insurance provider.”
I should note that there was the occasional positive review—although few and far between and mostly from calendar year 2000—no doubt submitted by one of the few among us who could actually file an application honestly stating that they have never suffered any of the small maladies that cause the price of an insurance policy to skyrocket—maladies that are no longer permitted to be a consideration in policies listed on an Obamacare healthcare exchange.
Surely, Avik looked into some of these reviews before staking his entire argument on the prices listed at eHeatlhInsurance.com?
Yet, had he done so, it seems incomprehensible that Roy would have gone forward with his attack on the California exchange prices based on such a comparison. He simply could not, in good conscience, use these rates as the basis of comparison after seeing the experiences of the many who ‘bit’ on the terrific listed prices only to find the actual quotes substantially higher. Indeed, if I may turn around Avik’s suggestion that I had done inadequate analysis for my own article, it seems fair to say that a bit more analysis on his part might have kept him from perpetrating so ill conceived a sleight-of-hand on his readers—unless, of course, the whole point was to publish something that could be modestly—if misleadingly—supported in the effort to continue the attack on Obamacare.
As I continued the process of learning what I could about the teaser rates listed on eHealthInsurance.com, I went to 5-starsite.com to see if they had a point-of-view on the company and their listed rates. Sure enough, I found the following:
“eHealthInsurance.com may prove to be a helpful website for getting information, but the company has no lack of complaints against it. Customers complain about the level of coverage they actually receive (emphasis added).They are often requested to make upfront payments but must wait several months for coverage to actually kick in. Those who do not choose one of the health insurance plans offered on the site complain of repeated phone calls, even false claims of them signing up for policies. There are several other complaints against this company, but they vary greatly in nature. With so many different complaints there is no way to predict what kind of experience new customers are in for. "
While I understand all too well that those who are vested in hating the Affordable Care Act will latch onto to anything that can be presented as evidence of the law’s terrors, it hardly seems unreasonable to expect that a condemnation based on price comparisons might actually be based on comparing real prices with real policy considerations.
But if Internet advertising is good enough for you when seeking real data, might I interest you in a lovely four bedroom home on a tree lined street, complete with two bathrooms and swimming pool?
Never mind that I like to refer to closets as ‘bedrooms’, the trees on the street have been ravaged by rodents for the past twenty years, the two bathrooms are actually outhouses I constructed—one in the front yard and one in the back—and the swimming pool is a bucket of mop water that has been sitting out in the sun for a year.
You read the more desirable description of the house on the Internet, a description that is technically correct, so it must be true as stated, yes?
The Dull Knives Come Out As Anti-Obamacare Forces Falsely Attack California Healthcare Exchange Prices
At the end of the day, I am comforted that the best a critic of the healthcare exchanges could come up with was a comparison between the real prices published by Covered California and some teaser rates posted on an Internet site that rarely hold up. This can only mean that there was an absence of credible data to be used in criticism. By any objective and legitimate criteria, the rates for purchasing individual health insurance policies on the exchanges in California, Washington and Oregon—the only price data available to date—are looking very hopeful…and that is good news for anyone looking to gain access to our healthcare system.
Contact Rick at firstname.lastname@example.org and follow me on Twitter and Facebook.
UPDATE: It turns out that Ezra Klein over at The Washington Post had pretty much the identical reaction to Avik Roy’s article as did I. Here is just a portion of what Ezra writes in his column today:
“Roy got his 146 percent by heading to eHealthInsurance.com, running a search for insurance plans in California and comparing the cost of the cheapest plans to the cost of the plans being offered in the exchanges. That’s not just comparing apples to oranges. It’s comparing apples to oranges that the fruit guy may not even let you buy.
I ran the same search Roy did. I looked for insurance in Irvine, Calif. — my home town. The average monthly premiums of the five cheapest plans is $114. So I took the middle plan, HealthNet’s IFP PPO Value 4500. It’s got a $4,500 deductible, a $2,500 deductible for brand-name medications, huge co-pays and a little “bestseller” icon next to it. And it’s only $109 a month — if they’ll sell it to you for that price.
That’s the catch, and it’s a big one. Click to buy the plan and eventually you’ll have to answer pages and pages of questions about your health history. Ever had cancer? How about an ulcer? How about a headache? Do you feel sad when it rains? When it doesn’t rain? Is there a history of cardiovascular disease in your family? Have you ever known anyone who had the flu? The actual cost of the plan will depend on how you answer those questions.”