Health insurance policy cancellations since Obamacare

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President Obama signing the Affordable Care Act into law on March 23, 2010.

When the Affordable Care Act (ACA or commonly referred to as Obamacare) was signed into law by President Barack Obama on March 23, 2010, there was much debate about what would happen to citizens' existing plans under the new healthcare reform.[1] One statement made repeatedly by the President, administration and Congressional supporters, was some form of the line Obama gave in an August 22, 2009, internet address, claiming, "If you like your private health insurance plan, you can keep your plan. Period."[2]

When the law was enacted on October 1, 2013, many individually insured people began receiving letters from their insurance carriers notifying them that their current plans would be canceled at the end of the policy term. The plans were canceled because they did not meet new minimum coverage requirements set by the law.[3] On October 29, 2013, NBC News reported that 50-75% of the 14 million Americans with individual healthcare plans would receive a cancellation notice in the next year.[4]

On November 14, 2013, under pressure from Democratic members of Congress, President Obama announced the administration's intention to allow people whose insurance plans had been canceled to re-enroll in their plans.[5] On December 19, 2013, the administration announced that those whose plans were canceled under the law met the Health and Human Services Department's "hardship exemption." The stated exemption covers those who "experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan."[6] On March 5, 2014, the delayed mandate was pushed back another year, until 2015, for those who had their plans canceled.[7]

Reasons for cancellation

Ten essential benefits for coverage

The law included ten essential benefits that plans created after the law's passage needed to include. Existing plans were grandfathered in, but few of the grandfathered plans remain due to frequent changes to health insurance policies.[8]
The ten essential benefits outlined by the ACA are:[9]
  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance abuse disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

State exchange regulations

  • California: Covered California, the state healthcare exchange, required cancellations of 900,000 individual insurance plans on December 31, 2013. The requirement was established so healthy patients, who may have stayed with their current plans for the next year, would join the state exchange, minimizing their impact on future rates. Just over a third of the cancellations, 310,000, will qualify for subsidies under the new exchange. The other 590,000 may see their rates rise under the new policies.[10]

Number of people impacted

  • NBC News reported that 50-75% of the 14 million who buy individual health insurance will likely receive a cancellation notice in the next year because their current plans do not meet the requirements of Obamacare.[4]
  • CBS News reported that more than two million Americans have been told they cannot renew their current insurance policies.[11]
  • The administration knew in July 2010 that more than 40-67% would likely not be able to keep their existing policies.[4]
  • Health policy consultant Robert Laszewski estimated 80% of individual insurance buyers would have to find new policies which would require more benefits and a higher price tag.[4]
  • According to the Washington Post, as of October 19, 2013, the enrollment numbers for people using exchanges to sign up for individual plans was about 476,000, meaning more people have received letters canceling their plans than have enrolled in new plans due to the struggling website. The first official report on enrollment in the federal exchanges was expected to be released November 15, 2013.[12]

Employee health insurance policies

Analysis done by the American Enterprise Institute predicted between 50-66% of small businesses would have policies canceled or could drop employee insurance altogether when the mandate covers employee-sponsored plans in late 2014. The study suggested as many as 100 million small and large business plans could be canceled due to the changes.[13]

Average healthcare policy renewal rate

  • A study published in Health Affairs journal in 2004 suggested that between 1996 and 2000, only 17% of individual plan customers maintained the same policy for two or more years.[14]

President Obama's apology

On November 7, 2013, President Obama issued an apology to those who lost their health insurance due to Obamacare regulations. He also stated that the administration was looking into a fix, claiming, "I've assigned my team to see what we can do to close some of the holes and gaps in the law because, you know, my intention is to lift up and make sure the insurance people buy is effective - that it's actually going to deliver what they think they're purchasing."[15]

The administration's fix

On November 14, 2013, President Obama announced the administration's plan to fix insurance plans that were canceled after Obamacare went into effect. The fix was intended to allow people to keep the plans they had prior to cancellation for one year. Those who were uninsured would not be eligible to enroll in those plans. A White House official acknowledged details still needed to be finalized, including getting commitments from state insurance commissioners. The administration issued the fix due to increased congressional unrest among Democrats over the struggles of the implementation of Obamacare.[5] The president stated, "This fix won't solve every problem for every person, but it's going to help a lot of people."[16]

Potential issues with the fix

  • It is unknown how prices of the previously impacted plans will be affected, but a White House official stated, "it will be up to insurance commissioners and states. Insurers would need to clear rate changes with the state's insurance commissioner. Insurers opposed legislative requirements that allowed consumers to keep plans that did not meet Obamacare requirements.[5]
  • Insurance companies were not required to renew the plans that were previously canceled, and their decision could be impacted by the effect on insurance pools of more young people keeping their previous plans and not electing to join the federal exchanges.[16]
  • Insurance consultant Robert Laszewski stated, "This means that insurance companies have 32 days to reprogram their computer systems for policies, rates, and eligibility, send notices to the policyholders via US Mail, send a very complex letter that describes just what the differences are between specific policies and Obamacare compliant plans, ask the consumer for their decision - and give them a reasonable time to make that decision - and then enter those decisions back into their systems without creating massive billing, claim payment, and provider eligibility list mistakes."[17]
  • Two healthcare policy analysts from the Texas Public Policy Foundation opined that the administration feigned ignorance that the law would result in millions of canceled insurance policies, and that the president's fix was an "attempt to outflank members of his own party who are beginning to break ranks."[18]

Delayed mandate for cancellations

On December 19, 2013, the administration announced that people whose plans were canceled after the Obamacare rollout would be eligible for the "hardship exemption," delaying the individual mandate for that group by one year. The exemption was originally made to cover those who "experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan." With pressure from Congress, led by Sen. Mark Warner (D-VA), Sebelius announced the exemption would include those with canceled policies under the "unexpected natural or human-caused event" clause.[6] Sebelius commented, "I agree with you that these consumers should qualify for this temporary hardship exemption, and I can assure you that the exemption will be available to them."[19]

On March 5, 2014, the administration announced that the delayed mandate could extend to two years, one more than was offered in the original delay due to canceled plans. Sen. Mitch McConnell stated his opposition to the new delay, stating, "By announcing a new delay in requiring that policies meet minimum coverage standards, the administration avoids a new round of health policy cancellations set to hit shortly before the November elections."[7]

Market ramifications

Insurers worried the White House was understating the number of people the change would impact. The head of the trade group America's Health Insurance Plans warned, "This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers."[6]

Re-enrollment through

  • Grandfathered policies will include those in effect when the president signed the Affordable Care Act on March 23, 2010, and that have not changed premium or out-of-pocket costs since.[20]
  • Those who want plans that begin January 1, 2014, must enroll by December 15, 2013.[21]

Possible ramifications of cancellations

Anti-Obamacare advertising

American's for Prosperity launched a $1 million ad campaign on November 7, 2013, aimed at representatives of four districts, Ann Kirkpatrick, (D-AZ), Nick Rahall, (D-WV), Dan Benishek, (R) and Joseph J. Heck, (R-NV). The ads criticize the two Democrats, who supported the law and support the Republicans who opposed the law. The group is also likely to continue the ad campaign throughout the 2014 election cycle.[22]

"Tell Ann Kirkpatrick to #ExemptMeToo"

"Keep fighting for us, Dan Benishek"

"Tell Nick Rahall #ExemptMeToo"

"Joe Heck keeps his word!"

Anthem Blue Cross cancellation lawsuit

Two California residents, Paul Simon and Catherine Coker, filed a lawsuit on November 4, 2013, against the Anthem Blue Cross insurance company over their canceled insurance policies. Coker and Simon claimed Anthem pressured them into leaving their grandfathered insurance plans in 2011. They asked the court to force Anthem to allow them and others in similar situations to return to the plans they had prior to the March 2010 "grandfather" deadline.[10]

Constituents paying higher premiums

  • Manhattan Institute for Policy Research
The Manhattan Institute released its own analysis of premiums under the Affordable Care Act for people who shop for coverage on their own. It found that 41 states, as well as D.C., will experience increases in premiums.[23] It also released an interactive map to demonstrate how premiums are affected in each state.[24]
A study conducted by the Heritage Foundation found that insurance premiums will increase under the first year of the Affordable Care Act in 45 of 50 states. It also found that premiums are expected to decrease in only five states: Colorado, New Jersey, New York, Ohio and Rhode Island, argued to be a result of those states already having "already over-regulated insurance markets that led to sharply higher premiums."[25]
  • American Action Forum
“All 50 states and the District of Columbia saw insurance rate increases, with 42 of those states experiencing triple digit percentage increases in premiums for the lowest-priced coverage. Pre-ACA premiums for a 30-year-old nonsmoking woman average $74.49 monthly, while post-ACA premiums average $188.72 per month, a $114.23, or 153 percent, increase.”[26][27]
  • Won Ha, a spokesman for Kaiser Permanente
The impact on individual premiums will vary based on age, benefits and location: “In general, older beneficiaries will tend to see lower rates or modest rate increases relative to their prior coverage. Younger beneficiaries, particularly those who had very lean benefit plans, may have significant increases.”[28]

Congressional pushback

November 4, 2013: Landrieu introduced the "Keeping the Affordable Care Act Promise Act," which would allow people to keep their previous plans, keeping true to President Obama's statements on individuals being allowed to keep their plans.[29] The bill is co-sponsored by Sens. Dianne Feinstein, Mark Pryor, Kay Hagan and Jeff Merkley.[30]
October 29, 2013: Landrieu spoke in favor of a proposal for legislation that would ensure that all Americans could keep their existing insurance coverage under Obamacare.[31] In her statement, she said she would either offer her own bill or formally sign onto another measure that would ensure that the law would not force anyone off of their existing health policies.[31]
“The promise was made, and it should be kept,” Landrieu said. “And it was our understanding when we voted for that bill that people when they have insurance could keep with what they had. So I’m going to be working on that fix.”[31]
October 30, 2013: The duo introduced legislation, S. 1617, aimed at giving Americans the ability to hold onto their plans if they liked them. The bill would add flexibility to the standards for insurance policies allowed under Obamacare.[32]
October 29, 2013: “My constituents are frightened. They are being forced out of health care plans they like. The clock is ticking. The federal website is broken. Their health care isn’t a glitch.”[33]

Statements on insurance plan choice before and after implementation

Kathleen Sebelius:

  • December 19, 2013: On Obamacare exemptions for those with canceled policies under the "hardship exemption," "I agree with you that these consumers should qualify for this temporary hardship exemption, and I can assure you that the exemption will be available to them."

Barack Obama:

  • November 14, 2013: "Insurers can extend current plans that would otherwise be canceled into 2014. This fix won't solve every problem for every person, but it is going to help a lot of people."[5]
  • November 8, 2013: "I am sorry that they, you know, are finding themselves in this situation, based on assurances they got from me. We’ve got to work hard to make sure that they know we hear them and that we’re going to do everything we can to deal with folks who find themselves in a tough position as a consequence of this."[15]
  • November 4, 2013: "Now, if you had one of these plans before the Affordable Care Act came into law and you really liked that plan, what we said was you can keep it if it hasn't changed since the law passed."[34]
  • "People are acting like this is some new phenomenon. Every year there was churn in this individual market. The average increase was double-digits on premiums in the same market, with or without the Affordable Care Act. People were getting, oftentimes, a very bad deal."[34]
  • October 30, 2013: "So if you're getting one of these letters, just shop around in the new marketplace. That's what it's for. Because of the tax credits that we are offering, and the competition between insurers, most people are going to be able to get better, comprehensive healthcare plans for the same price or even cheaper than projected."[35]
  • June 15, 2009: “No matter how we reform health care, we will keep this promise to the American people: If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you'll be able to keep your health care plan, period. No one will take it away, no matter what. My view is that health care reform should be guided by a simple principle: Fix what's broken and build on what works. And that's what we intend to do...Again, this is for people who aren't happy with their current plan. If you like what you're getting, keep it. Nobody is forcing you to shift."[36]

Part of Bill Clinton's interview with

Former President Bill Clinton:

  • November 12, 2013: "So I personally believe, even if it takes a change to the law, the president should honor the commitment the federal government made to those people and let them keep what they got."[37]

White House:

  • “One of the main goals of the law is to ensure that people have insurance they can rely on – that doesn’t discriminate or charge more based on pre-existing conditions. The consumers who are getting notices are in plans that do not provide all these protections – but in the vast majority of cases, those same insurers will automatically shift their enrollees to a plan that provides new consumer protections and, for nearly half of individual market enrollees, discounts through premium tax credits...Nothing in the Affordable Care Act forces people out of their health plans: The law allows plans that covered people at the time the law was enacted to continue to offer that same coverage to the same enrollees – nothing has changed and that coverage can continue into 2014,” said White House spokesperson Jessica Santillo.[38]
  • October 29, 2013: “What the president said and what everybody said all along is that there are going to be changes brought about by the Affordable Care Act to create minimum standards of coverage, minimum services that every insurance plan has to provide. So it's true that there are existing healthcare plans on the individual market that don't meet those minimum standards and therefore do not qualify for the Affordable Care Act," said White House spokesman Jay Carney.[38]

Marilyn Tavenner:

  • October 29, 2013: CMS chief Tavenner claimed Obamacare was not responsible for the plan cancellations because "Half the people in the individual market prior to 2010 didn't stay on their policies." If they had maintained pre-2010 policies, those plans could be grandfathered in.[39]

Recent news

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Health insurance policy cancellations news feed

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See also

External links


  1. Govtrack, "H.R. 3590 (111th): Patient Protection and Affordable Care Act," accessed November 5, 2013
  2. Boston Globe, "Obama slams 'outrageous myths' on health care; Republicans say president 'plays fast and loose' with facts," August 22, 2009
  3. New York Times, "Cancellation of Healthcare Plans Replaces Website Problems as Prime Target," October 29, 2013
  4. 4.0 4.1 4.2 4.3 NBC News, "Obama administration knew millions could not keep their health insurance," October 29, 2013
  5. 5.0 5.1 5.2 5.3 New York Times, "A Contrite Obama Unveils a Health Fix," November 14, 2013
  6. 6.0 6.1 6.2 Washington Post, "The individual mandate no longer applies to people whose plans were canceled," December 19, 2013
  7. 7.0 7.1 Fox News, "Administration offers 2-year ObamaCare extension for canceled health plans," March 5, 2014
  8. Washington Post, "This is why Obamacare is canceling some people's insurance plans," October 29, 2013
  9. National Association of Insurance Commissioners, "Patient Protection and Affordable Care Act of 2009: Health Insurance Exchanges," April 20, 2010
  10. 10.0 10.1 Los Angeles Times, "Anthem Blue Cross is sued over policy cancellations," November 4, 2013
  11. CBS News, "Obamacare: More than 2 million people getting booted from existing health insurance plans," accessed November 5, 2013
  12. Washington Post, "We know 476,000 Obamacare applications have started. We don't know how many will finish shopping.," October 20, 2013
  13. Fox News, "Second wave of health plan cancellations looms," November 20, 2013
  14. Health Affairs, "Patterns of Individual Health Insurance Coverage, 1999-2000," November 2004
  15. 15.0 15.1 Washington Post, "President Obama apologizes to Americans who are losing their health insurance," November 7, 2013
  16. 16.0 16.1 Reuters, "Obama, under political pressure, offers fix to healthcare policy," November 14, 2013
  17. Washington Post, "The White House's Obamacare fix is about to create a big mess," November 14, 2013
  18. The Hill, "The Obamacare fix: Feign ignorance," November 18, 2013
  19. Washington Times, "White House warns Americans of GOP efforts to repeal Obamacare," December 19, 2013
  20. CNBC, "Your insurance is canceled because of Obamacare? Now what?," accessed November 5, 2013
  21. Bloomberg, "Health Policies Canceled in Latest Hurdle for Obamacare," accessed November 5, 2013
  22. Washington Post, "AFP launches new $1 million ad buy targeting four lawmakers on health care," November 7, 2013
  23. Forbes, "49-State Analysis: Obamacare To Increase Individual-Market Premiums By Average Of 41%," accessed November 5, 2013
  24. Manhattan Institute, "Know Your Rates," accessed November 5, 2013
  25. Heritage Foundation, "How Will You Fare in the Obamacare Exchanges?," accessed November 5, 2013
  26. The Washington Free Beacon, "Study: Average Premiums for Young Women to Increase 193%," accessed November 5, 2013
  27. American Action Forum, "Women “Young Invincibles” Not Immune to Premium Rate Increases," accessed November 5, 2013
  28. Bloomberg, "Health Policies Canceled in Latest Hurdle for Obamacare," accessed November 5, 2013
  29. Weekly Standard, "Landrieu Introduces Bill to 'Keep Promise' of Obamacare," November 4, 2013
  30. Washington Post, "Obamacare is in much more trouble thn it was one week ago," November 13, 2013
  31. 31.0 31.1 31.2 Politico, "Landrieu to propose halting vanishing health plans," accessed October 30, 2013
  32. Fox News, "Obama: 'Shop around' if you lose your health insurance plans," accessed November 5, 2013
  33. NY Times, "Cancellation of Healthcare Plans Replaces Website Problems as Prime Target," accessed November 5, 2013
  34. 34.0 34.1 USA Today, "Obama adds caveat to 'You can keep it' declaration," accessed November 5, 2013
  35. Fox News, "Obama: 'Shop around' if you lose your health insurance plans," accessed November 5, 2013
  37. The Hill, "Clinton: Let people keep coverage," November 12, 2013
  38. 38.0 38.1 NBC News, "Obama administration knew millions could not keep their health insurance," accessed November 5, 2013
  39. National Journal, "Medicare Chief: Obamacare Isn't Responsible for Insurance Plan Cancellations," October 29, 2013