Obamacare 101: Why do men need to buy maternity coverage?

Americans searching for new health insurance plans under Obamacare are finding they need to pay for coverage they don't want or need. That idea is fundamental to Obamacare.

They sound surprised, perplexed, and angry. People who have received cancellation notices for their individual health insurance policies are telling reporters and politicians that they just don’t get it. Why were they kicked off their plans for more fancy ones under Obamacare that they don’t want, and that might cost more?

In fact, this could be a question for anyone seeking health insurance on the Affordable Care Act's new exchanges. Men are faced with buying new plans that include maternity coverage, for example. So are women past childbearing age.

On Sunday morning talk shows, Democratic lawmakers tried to explain. The problem, they said, is that there hasn’t been enough explanation.

President Obama got too caught up in the sound bite of keeping your plan if you like it, said Rep. James Clyburn of South Carolina. "This is a sound bite that the president probably needed to take some more time to explain to the American people," he said on CNN's "State of the Union."

Sen. Kirsten Gillibrand of New York echoed the point. The president "should have just been more specific," she said on ABC’s "This Week."

So what should the president have emphasized?

Maybe that these new plans, with all their extra coverage, are fundamental to what Obamacare is.

Obamacare is about making sure that everyone is covered in virtually any health emergency, and that policies and pricing won't be discriminatory. Without coverage – such as maternity insurance – that many people don’t need, Obamacare won't do what it was meant to do.

According to Obamacare, the estimated 4.2 million people who have so far received cancellation notices have "substandard" policies. Mr. Obama recently offered a temporary reprieve – allowing these policies to continue for one year. But ultimately, Obama wants these plans to go away.

The reason is that these plans, by their very nature, don't cover a lot of things. Critics say they are narrow in coverage – excluding things such as mental health or preventive care – and are characterized by insurance denials, gaps in coverage, and big changes in pricing.

Moreover, people who are generally healthy – like the so-called "young invincibles" – may go for these plans because of lower premiums, but when they do need care, they would pay much more than a typical person with group insurance.

As Senator Gillibrand put it: "The minute you get sick, you’re going to have to go into bankruptcy."

More broadly, Obamacare is dependent upon a maximum number of people buying into it to share the costs, spread the risk, and make it sustainable – hence the individual mandate that forces all Americans to buy health insurance or face a penalty. But eliminating “substandard” individual plans is another way to do this and – this is key – end policy and pricing discrimination.

Take the maternity insurance example.

If you didn’t include maternity coverage, insurers could charge women more than men for insurance, notes Jonathan Gruber, a professor at the Massachusetts Institute of Technology who helped design the Massachusetts health plan and advised on Obamacare. Why should women be discriminated against just because they are the only ones, biologically speaking, who can bring children into the world?

Or what about mental health care? If you don’t include that, then insurers could charge the mentally ill more than the mentally healthy, and so on.

If you are going to end insurance discrimination, "then you need to have the mandate refer to a basic set of benefits that encompasses all aspects of medical care," he says.

Interestingly, Obamacare does allow for some discrimination. For example, the oldest individuals can pay up to three times as much for the same product as young people do. But this 3:1 ratio is a cap. If real costs were considered, seniors would have to pay much more than that because of the vast difference in the cost of caring for them versus for young people.

Proponents of Obamacare argue that broader coverage serves the "social good," says John Rother, CEO of the National Coalition on Health Care. "We want people who need health care to get the services they need, and if they don’t get them, we face costs in other ways," such as lost productivity.

Will Americans agree?

It’s only the individual experience that will be convincing, and this will be hard to discern until the broken HealthCare.gov website is fixed, says Mr. Rother. Then, users can compare and contrast. Right now, Rother adds, fear of the unknown is taking over – fear that people are going to lose what they like for something inferior. "The information has to be personalized to be persuasive."