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

November 26 • 4:00 PM

Turmoil at JPMorgan

Examiners are reportedly blocked from doing their job as “London Whale” trades blow up.


November 26 • 2:00 PM

Rich Kids Are More Likely to Be Working for Dad

Nepotism is alive and well, especially for the well-off.


November 26 • 12:00 PM

How Do You Make a Living, Taxidermist?

Taxidermist Katie Innamorato talks to Noah Davis about learning her craft, seeing it become trendy, and the going-rate for a “Moss Fox.”


November 26 • 10:28 AM

Attitudes About Race Affect Actions, Even When They Don’t

Tiny effects of attitudes on individuals’ actions pile up quickly.


November 26 • 10:13 AM

Honeybees Touring America


November 26 • 10:00 AM

Understanding Money

In How to Speak Money, John Lanchester explains how the monied people talk about their mountains of cash.


November 26 • 8:00 AM

The Exponential Benefits of Eating Less

Eating less food—whole food and junk food, meat and plants, organic and conventional, GMO and non-GMO—would do a lot more than just better our personal health.


November 26 • 6:00 AM

The Incorruptible Bodies of Saints

Their figures were helped along by embalming, but, somehow, everyone forgot that part.


November 26 • 4:00 AM

The Geography of Real Estate Markets Is Shifting Under Our Feet

Policies aimed at unleashing supply in order to make housing more affordable are relying on outdated models.



November 25 • 4:00 PM

Is the Federal Reserve Bank of New York Doing Enough to Monitor Wall Street?

Bank President William Dudley says supervision is stronger than ever, but Democratic senators are unconvinced: “You need to fix it, Mr. Dudley, or we need to get someone who will.”


November 25 • 3:30 PM

Cultural Activities Help Seniors Retain Health Literacy

New research finds a link between the ability to process health-related information and regular attendance at movies, plays, and concerts.


November 25 • 12:00 PM

Why Did Doctors Stop Giving Women Orgasms?

You can thank the rise of the vibrator for that, according to technology historian Rachel Maines.


November 25 • 10:08 AM

Geography, Race, and LOLs

The online lexicon spreads through racial and ethnic groups as much as it does through geography and other traditional linguistic measures.


November 25 • 10:00 AM

If It’s Yellow, Seriously, Let It Mellow

If you actually care about water and the future of the species, you’ll think twice about flushing.


November 25 • 8:00 AM

Sometimes You Should Just Say No to Surgery

The introduction of national thyroid cancer screening in South Korea led to a 15-fold increase in diagnoses and a corresponding explosion of operations—but no difference in mortality rates. This is a prime example of over-diagnosis that’s contributing to bloated health care costs.



November 25 • 6:00 AM

The Long War Between Highbrow and Lowbrow

Despise The Avengers? Loathe the snobs who despise The Avengers? You’re not the first.


November 25 • 4:00 AM

Are Women More Open to Sex Than They Admit?

New research questions the conventional wisdom that men overestimate women’s level of sexual interest in them.


November 25 • 2:00 AM

The Geography of Innovation, or, Why Almost All Japanese People Hate Root Beer

Innovation is not a product of population density, but of something else entirely.


November 24 • 4:00 PM

Federal Reserve Announces Sweeping Review of Its Big Bank Oversight

The Federal Reserve Board wants to look at whether the views of examiners are being heard by higher-ups.



November 24 • 2:00 PM

That Catcalling Video Is a Reminder of Why Research Methods Are So Important

If your methods aren’t sound then neither are your findings.


November 24 • 12:00 PM

Yes, Republicans Can Still Win the White House

If the economy in 2016 is where it was in 2012 or better, Democrats will likely retain the White House. If not, well….


November 24 • 11:36 AM

Feeling—Not Being—Wealthy Cuts Support for Economic Redistribution

A new study suggests it’s relative wealth that leads people to oppose taxing the rich and giving to the poor.


Follow us


Attitudes About Race Affect Actions, Even When They Don’t

Tiny effects of attitudes on individuals' actions pile up quickly.

Geography, Race, and LOLs

The online lexicon spreads through racial and ethnic groups as much as it does through geography and other traditional linguistic measures.

Feeling—Not Being—Wealthy Cuts Support for Economic Redistribution

A new study suggests it's relative wealth that leads people to oppose taxing the rich and giving to the poor.

Sufferers of Social Anxiety Disorder, Your Friends Like You

The first study of friends' perceptions suggest they know something's off with their pals but like them just the same.

Standing Up for My Group by Kicking Yours

Members of a minority ethnic group are less likely to express support for gay equality if they believe their own group suffers from discrimination.

The Big One

One in two United States senators and two in five House members who left office between 1998 and 2004 became lobbyists. November/December 2014

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