Insurers Are Using Obamacare Confusion to Sell Junk Plans

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The insurance industry, that ever-resilient sector, has found a way to turn America's confusion about Obamacare into a business opportunity. As Talking Points Memo's Eric Lach reports on Friday morning, some companies are taking advantage of that confusion to scare people away from the exchanges and sell them non-compliant fixed benefit plans. 

These companies, like USHealth Group in South Carolina, recommend these plans with three mostly false arguments, according to Lach. First, not everyone needs a plan that meets the requirements of the Affordable Care Act. Georgene Mortimer, a winery owner, told Talking Points Memo that her USHealth Group agent said the exchanges are only for very sick people, as in those with pre-existing conditions. Obviously young and healthy people benefit from more comprehensive coverage, especially as they get less young and less healthy. 

Then there's the idea that a non-compliant plan is cheaper than a compliant plan, even when you factor in the individual mandate. As our own Allie Jones has pointed out, groups like Generation Opportunity, who argue that paying the mandate and buying low or fixed benefit insurance is the cheapest option, haven't exactly figured out their math yet. That pitch gains more traction among successful business owners and recent retirees, but from 2016 on, the fine per individual will be at least $695 a year. That's a lot to pay for the privilege of basically being uninsured under a fixed benefit plan.

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Fear, however, is a compelling argument. USHealth frames Obamacare as scary, and a scam to provide kick backs to Obamacare supporters. That's not too far off from what noted health "expert" and Three's Company star Suzanne Somers argued when she called the law a socialist ponzi scheme

Other companies plan on continuing to sell non-compliant plans, and predict that that market will do well. It might, if only because people on both sides of the aisle seem to be genuinely confused and misinformed about what's going on. Not politicians and political and policy wonks, but regular people who don't diligently follow politics. Last month The Washington Post asked a few of these civilians what they thought of the law. "I don’t really understand what’s going to happen with the Affordable Care Act or Obamacare," said one supporter. A critic said it was going to end up being socialized medicine, though admitted he'd look at the exchanges (he as two pre-existing conditions). Of all the people interviewed, the most informed man was an 87-year-old critic currently enjoying the benefits of Medicare.  "I don’t care. I don’t need it," he said.

And the numbers back up the anecdotal evidence. An October 31 Gallup poll found that while 80 percent of uninsured Americans know they're required to get health insurance, only 27 percent were familiar or very familiar with the exchanges. Sixty-nine percent of uninsured Americans are confused, and the insurance industry is ready to turn that into a business opportunity. 

This article is from the archive of our partner The Wire.