Menus Subscribe Search

Follow us


health-care-generic-everything-possible-7

(PHOTO: EVERYTHING POSSIBLE/SHUTTERSTOCK)

Was Your Health Policy Canceled? What We Do and Don’t Know

• November 07, 2013 • 4:00 PM

(PHOTO: EVERYTHING POSSIBLE/SHUTTERSTOCK)

Hundreds of thousands of individual policyholders, at minimum, will have to find new plans as insurers respond to new coverage requirements under Obamacare. But is that necessarily bad?

Every day, we’re seeing reports that consumers across the country will be dropped by their health insurance companies on January 1 or another date in 2014. But two central questions remain:

First, just how many people will be affected?

Second, and more importantly, is this a good or bad thing?

We don’t yet know the answer to either question, although the answer to the first question is surely a big number. Here’s where things stand:

A minimum of several hundred thousand people with individual health insurance policies (those not provided by their employers) have received letters notifying them that their coverage will be terminated on January 1—or at some date after that—because their plans don’t meet the requirements of the Affordable Care Act.

The issue has been percolating for several weeks, initially being overshadowed by the rocky rollout of the Healthcare.gov federal health insurance marketplace. But recently, in part because of a prominent NBC News report, the issue has gained traction. Republican lawmakers and the act’s opponents have given it more attention than the website’s continuing woes.

The story is full of nuance, and that’s what makes it easy to misunderstand.

What is definitely true is that many people are receiving notices saying that they will have to find new insurance coverage on January 1 or a later date. That directly contradicts what President Obama said repeatedly: that those who liked their plans could keep them. (The Washington Post has said Obama’s statements deserve four pinnochios because they were not true.)

How many people are affected?

According to the NBC News report:

Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent.

Sarah Kliff at the Washington Post writes:

It’s hard to put an exact number on this, given that insurance plans are the ones who decide whether or not to continue offering an insurance product. Experts have estimated that somewhere between half and three-quarters of those who currently buy their own policies will not have the option to renew coverage, which works out to around 7 to 12 million people.

Kaiser Health News, among the first to report on the issue, has been more conservative:

Health plans are sending hundreds of thousands of cancellation letters to people who buy their own coverage, frustrating some consumers who want to keep what they have and forcing others to buy more costly policies.

Kaiser posted more:

No one knows how many of the estimated 14 million people who buy their own insurance are getting such notices, but the numbers are substantial. Some insurers report discontinuing 20 percent of their individual business, while other insurers have notified up to 80 percent of policyholders that they will have to change plans.

Even when we do know a firm number, a more fundamental question is: Are these cancellations in consumers’ best interests?

In short, there are winners and there are losers—just as there have been in many other areas of the Affordable Care Act.

Some of the people being terminated from their plans will end up paying more for new coverage; some will pay less.

Some will qualify for government subsidies to lower the cost of their insurance even further, and some won’t.

In many if not all cases, they will receive a richer set of benefits. But many consumers may not have wanted them—or needed them (maternity care, for example).

Equally clear is that the new marketplace taking shape will not allow insurance companies to discriminate based on individuals’ pre-existing conditions; nor can insurers charge older people far higher rates than the young.

And just because somebody receives a cancellation notice and believes his or her insurance costs will go up doesn’t mean that’s right. Michael Hiltzik at the Los Angeles Times has done a good piece raising questions about the veracity of some of the stories being reported.

It’s easy to see this issue through a partisan lens, and that is happening. But then there are cases like Paul Levy’s.

Levy is a smart guy, the former president and CEO of Beth Israel Deaconess Medical Center in Boston, and he has a pretty good understanding of how the health-care system operates.

Recently, he wrote a post on his blog (“Didn’t They Promise Lower Costs?”) about being dropped by his insurance company and being forced to spend considerably more money for insurance. He had purchased his policy after March 2010, so he wasn’t somebody covered by the president’s “keep your plan” pledge.

To summarize, for $600 more per month, my co-pay for almost everything goes up. My share of an inpatient admission or outpatient surgery goes up 233%; a CT or MRI goes up 500%; and ED visits are double the cost.

Now, I do get the benefit of an out-of-pocket maximum of $3,000. But I will pay $7,200 extra for that protection. To break even, I would have had to spend $10,200 in out-of-pocket items under the Massachusetts plan.

I know I could downgrade to a lower level of insurance and reduce my monthly premiums, but then other items would also change in price and availability. This is the plan that best meets our needs.

A professor of management and operations at Northwestern University’s Kellogg School of Management followed up with Levy and suggested a different plan that could save him some money. But Levy still concluded he’ll be in worse shape than he is now. Here’s a graphic he made comparing his current plan with the plan he will purchase:

tumblr_inline_mvj9wcyEfM1qmqbhx

Levy writes:

My premium has gone up $220 per month (or 15%), and I will likely spend another $1000 covering the deductibles. My total percentage increase depends on how much additional care I need past my deductibles.

President Obama addressed the issue during a visit to Boston and made a pretty bold statement: “There are a number of Americans—fewer than five percent of Americans—who’ve got cut-rate plans that don’t offer real financial protection in the event of a serious illness or an accident. … A lot of people thought they were buying coverage, and it turned out not to be so good.”

Levy’s plan doesn’t appear to fit the president’s characterization. (Another example of sweeping generalizations dispensing with nuance.)

While Levy sees value in the act’s goals, he wrote that he wishes the administration was more forthright about what is actually happening and less defensive—for instance, parsing the words of the president’s pledge.

I have been listening to actuaries for many months who made it clear that the new plans would have to be more expensive to cover the law’s guaranteed issue and other insurance requirements. Those requirements are extremely desirable in providing insurability and financial security to millions of Americans and are, in fact, key attributes of the ACA. If the costs and benefits of these requirements had been addressed honestly by the administration, perhaps it would not feel the need to parse the President’s promise as finely as his spokesperson did today.


This post originally appeared on ProPublica, a Pacific Standard partner site.

Charles Ornstein
Charles Ornstein, in collaboration with Tracy Weber, was a lead reporter on a series of articles in The Los Angeles Times titled "The Troubles at King/Drew" hospital that won the Pulitzer Prize for Public Service, the Robert F. Kennedy Journalism Award, and the Sigma Delta Chi Award for public service in 2005.

More From Charles Ornstein

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

October 24 • 5:00 AM

Why We Gossip: It’s Really All About Ourselves

New research from the Netherlands finds stories we hear about others help us determine how we’re doing.


October 24 • 2:00 AM

Congratulations, Your City Is Dying!

Don’t take population numbers at face value.


October 23 • 4:00 PM

Of Course Marijuana Addiction Exists

The polarized legalization debate leads to exaggerated claims and denials about pot’s potential harms. The truth lies somewhere in between.


October 23 • 2:00 PM

American Companies Are Getting Way Too Cozy With the National Security Agency

Newly released documents describe “contractual relationships” between the NSA and U.S. companies, as well as undercover operatives.


October 23 • 12:00 PM

The Man Who’s Quantifying New York City

Noah Davis talks to the proprietor of I Quant NY. His methodology: a little something called “addition.”


October 23 • 11:02 AM

Earliest High-Altitude Settlements Found in Peru

Discovery suggests humans adapted to high altitude faster than previously thought.


October 23 • 10:00 AM

The Psychology of Bribery and Corruption

An FBI agent offered up confidential information about a political operative’s enemy in exchange for cash—and they both got caught. What were they thinking?


October 23 • 8:00 AM

Ebola News Gives Me a Guilty Thrill. Am I Crazy?

What it means to feel a little excited about the prospect of a horrific event.


October 23 • 7:04 AM

Why Don’t Men Read Romance Novels?

A lot of men just don’t read fiction, and if they do, structural misogyny drives them away from the genre.


October 23 • 6:00 AM

Why Do Americans Pray?

It depends on how you ask.


October 23 • 4:00 AM

Musicians Are Better Multitaskers

New research from Canada finds trained musicians more efficiently switch from one mental task to another.


October 22 • 4:00 PM

The Last Thing the Women’s Movement Needs Is a Heroic Male Takeover

Is the United Nations’ #HeForShe campaign helping feminism?


October 22 • 2:00 PM

Turning Public Education Into Private Profits

Baker Mitchell is a politically connected North Carolina businessman who celebrates the power of the free market. Every year, millions of public education dollars flow through Mitchell’s chain of four non-profit charter schools to for-profit companies he controls.


October 22 • 12:00 PM

Will the End of a Tax Loophole Kill Off Irish Business and Force Google and Apple to Pay Up?

U.S. technology giants have constructed international offices in Dublin in order to take advantage of favorable tax policies that are now changing. But Ireland might have enough other draws to keep them there even when costs climb.


October 22 • 10:00 AM

Veterans in the Ivory Tower

Why there aren’t enough veterans at America’s top schools—and what some people are trying to do to change that.


October 22 • 8:00 AM

Our Language Prejudices Don’t Make No Sense

We should embrace the fact that there’s no single recipe for English. Making fun of people for replacing “ask” with “aks,” or for frequently using double negatives just makes you look like the unsophisticated one.


October 22 • 7:04 AM

My Politicians Are Better Looking Than Yours

A new study finds we judge the cover by the book—or at least the party.


October 22 • 6:00 AM

How We Form Our Routines

Whether it’s a morning cup of coffee or a glass of warm milk before bed, we all have our habitual processions. The way they become engrained, though, varies from person to person.


October 22 • 4:00 AM

For Preschoolers, Spite and Smarts Go Together

New research from Germany finds greater cognitive skills are associated with more spiteful behavior in children.


October 21 • 4:00 PM

Why the Number of Reported Sexual Offenses Is Skyrocketing at Occidental College

When you make it easier to report assault, people will come forward.


October 21 • 2:00 PM

Private Donors Are Supplying Spy Gear to Cops Across the Country Without Any Oversight

There’s little public scrutiny when private donors pay to give police controversial technology and weapons. Sometimes, companies are donors to the same foundations that purchase their products for police.


October 21 • 12:00 PM

How Clever Do You Think Your Dog Is?

Maybe as smart as a four-year-old child?


October 21 • 10:00 AM

Converting the Climate Change Non-Believers

When hard science isn’t enough, what can be done?



October 21 • 8:00 AM

Education Policy Is Stuck in the Manufacturing Age

Refining our policies and teaching social and emotional skills will help us to generate sustained prosperity.


Follow us


Earliest High-Altitude Settlements Found in Peru

Discovery suggests humans adapted to high altitude faster than previously thought.

My Politicians Are Better Looking Than Yours

A new study finds we judge the cover by the book—or at least the party.

That Cigarette Would Make a Great Water Filter

Clean out the ashtray, add some aluminum oxide, and you've (almost) got yourself a low-cost way to remove arsenic from drinking water.

Love and Hate in Israel and Palestine

Psychologists find that parties to a conflict think they're motivated by love while their enemies are motivated by hate.

How to Water a Farm in Sandy Ground

Physicists investigate how to grow food more efficiently in fine-grained soil.

The Big One

One company, Amazon, controls 67 percent of the e-book market in the United States—down from 90 percent five years ago. September/October 2014 new-big-one-5

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.