“Junk” Health Plans and Other Obamacare Insurance Myths

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 Summary by The Market Institute of Heritage Foundation Issue Brief #4145
The Heritage Foundation recently released Issue Brief #4145 regarding a couple of myths surrounding the Affordable Care Act and the way it is impacting insurance policies. Advocates of the law maintain the protections included in the legislation are necessary to better protect consumers in the marketplace. They say that the disruptive nature byproduct of the law – the cancellation of millions of plans – is a good thing because those plans were “substandard” in the first place. The idea that the plans were substandard is largely untrue.Obamacare has gradually phased out plans that did not include “catastrophic coverage.” The White House portrayed the limited-benefits plans as a systemic problem, but in 2012 only 725,100 individuals were enrolled in them. The administration also claimed that many Americans were denied coverage, with one official calling the insurance market “the Wild Wild West.” Since the HIPPA Act of 1996, insurers have broadly been prohibited from from canceling or refusing to renew coverage. Finally, the Obama Administration completely overstated the pre-existing condition problem in the insurance market. Only 30% of the consumers that had pre-existing condition actually signed up in the high risk pools, which amounted to roughly 115,000 people.

Obamacare is canceling many plans that people want, need, or able to afford and replaces them with plans that the government deems “better.” The government takeover of the private insurance market had lead to less choices for consumers and now, higher costs. The regulatory authority and market controls enacted by the ACA far outweighs the problems with the insurance market prior to the law.

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