How Many People Are Losing Their Plans Under Obamacare, Really?

by Dan Diamond, California Healthline Contributing Editor

TOPIC ALERT:

If you like your health plan, can you keep it?

That question dogged health reform efforts years ago, and it's again the "question du jour," Politifact notes; the fact-checking outfit has investigated at least six related claims by prominent politicians in the past two weeks.

And while President Obama had repeatedly pledged -- at least 23 times between 2008 and 2010, according to a New York magazine video -- that his health care legislation wouldn't affect Americans' health plans, White House officials have been forced to rework the statement amid mounting scrutiny.

"Because of the competition between insurers, and the new health care tax credits, most people will be able to buy better plans for the same price or even cheaper than what they've gotten before," the president told supporters on Monday night.

That's "a far cry from the shorter, bumper sticker ready pledge" that Obama first offered during his 2008 presidential campaign, Z. Byron Wolf noted on CNN.

For most Americans, the answer is simple: Yes, you can keep your plan. The Medicare program hasn't changed its eligibility threshold; Medicaid has expanded its income limits. And while some firms have moved about 1 million workers to private exchanges, the vast majority of Americans who get coverage through employer-sponsored insurance plans will see no changes in 2014.

Even people getting "cancellation letters" aren't necessarily being dropped; in many cases they're being moved to new plans or presented with alternate options, state insurance commissioners say.

Given the huge amount of noise around the ACA, the signal is getting lost, experts warn. Here's a look at several key issues that are getting distorted amid the political uproar.

How Many 'Cancellations' Are There, Really?

At least half of the 14 million people who shop in the individual insurance market can expect to receive a cancellation letter ahead of next year.

A review by "Road to Reform" found that hundreds of thousands of cancellation letters had already been sent in states like Oregon, Florida and Georgia. And about 1 million of consumers affected are in California.

One key PR challenge: The cancellation letters are piling up at a much faster rate than Americans are able to sign up for new coverage.

In North Dakota -- where just 20 policies were sold on the federal exchange as of late last month -- at least 2,500 cancellation letters had gone out to residents last month.

The federal government's original intent was to have their new insurance marketplaces up and running, so affected consumers would be easily able to shop around for a replacement.

"Although they're canceled, they are offered another policy," CMS Administrator Marilyn Tavenner told a Senate panel on Tuesday. "But I think what's important for them to understand is, it's not just that policy, it's also the ability to go on the exchange."

But given the exchange's technical woes, many of these consumers haven't yet had the chance.

How Many People Will End Up Paying More?

Another PR problem: A slew of anecdotes where consumers report that their new plans cost significantly more than the plans that they just lost.

As Lisa Aliferis reported for KQED's "State of Health" blog, some Californians are seeing premiums go up -- and not just by a little, but a lot. Aliferis details the case of Mark Brown, whose premiums shot up by about 90% after Kaiser canceled his old plan and offered him a new one.

It's still unclear how many Americans are being asked to spend more, and the unique factors driving each customer's situation.

In some cases, it's because healthy consumers who got by with low premiums are being asked to pay more and cross-subsidize the sicker Americans now obtaining coverage. In others, it's because the old plan simply didn't meet minimum requirements under the ACA.

But once the initial flurry of media attention subsides, and consumers have a chance to understand their new plan options and subsidies, many Americans will eventually realize they're better off, according to Larry Levitt of the Kaiser Family Foundation.

"Of course, this is not really easy to explain in a soundbite," Levitt told The New Republic's Jonathan Cohn.

Could 'If You Like Your Plan, You Can Keep Your Plan' Ever Have Been True?

The comprehensive health reform proposed by the president was always destined to do away with many plans being sold on the individual insurance market, according to Kip Piper, a former White House budget officer and Medicaid state official.

"The fact that ACA would effectively nuke most of the existing commercial individual health insurance market was never in question," Piper told ProPublica's Charles Ornstein.

And simply ordering insurers to keep customers -- even as their plans get canceled -- isn't so simple.

"From a regulatory perspective, health insurers in the individual market have no choice but to discontinue non-compliant policies and, if they wish to keep business, offer new, compliant policies," Piper added. "Health insurance is a binding contract. Insurers can't merely transfer people."

It's possible that there could have been a more staggered approach to phasing out old plans and allowing consumers to shop for new ones. Insurance Commissioner Dave Jones, who this week pushed Blue Shield of California to delay 115,000 plan cancellations until March, thinks that the Golden State was too aggressive in setting up deadlines.

"The Dec. 31 cutoff for individual policies in California didn't have to happen," Jones told Chad Terhune of the Los Angeles Times on Tuesday.

Can These Cancellations Be Prevented?

Jones' move has attracted national attention -- but it's unlikely to be replicated, given California's unique regulations for its insurance market. (See today's California Healthline for more details.)

However, several officials around the nation are exploring similar delays. Louise Radnofsky and Timothy Martin of the Wall Street Journal note that Vermont's governor is pushing the state's dominant insurers to let customers keep their plans through the end of March.

And the House is poised to take up Rep. Fred Upton's (R-Mich.) bill to allow insurers to continue selling plans that would otherwise be banned under the ACA. (Sen. Mary Landrieu (D-La.) went a step further this week, proposing that insurers be required to keep offering the plans to paying customers.)

But keeping these plans around might not be a good thing, experts warn. For example, health care remains the biggest driver of bankruptcies, and many of these now-canceled plans did little to prevent that.

"The point of coverage is to provide peace of mind and prevent financial ruin in case of an illness or accident -- and there were too many substandard plans in the individual market that didn't provide that basic security," Anthony Wright, executive director of Health Access, said in a statement on Tuesday. "There were junk policies out there that were cheap in premium but worth even less in the coverage they provided."

Forcing insurers to keep maintaining these plans "would be a step backwards," deemed the USA Today editorial board.

Is This Really The Fault of Obamacare?

Via Twitter, White House adviser Valerie Jarrett last week claimed that "FACT: Nothing in #Obamacare forces people out of their health plans."

But Jarrett's claim is a fiction, experts suggested to Politifact; there's too much in the Affordable Care Act that reshapes market dynamics and affects how insurers offer coverage.

"The right view of this is that the law does motivate or force change, and that's a virtue," Austin Frakt, an author of The Incidental Economist, told Politifact.

But it is true that millions of Americans who shopped in the individual market would see changes every year -- a trend that's unrelated to the ACA.

"Even before health reform, insurance companies have changed product offerings over time and there was always a consumer protection requirement to give notice, 90 days typically, that your plan is ending and here are your options," Oregon Insurance Commissioner Laura Cali told the Portland Business Journal.

"We're just now seeing the entire market do it at one time."

Around the Nation

Here's a look at other stories making news as the nation races down the road to reform.

Is the Affordable Care Act too complicated? Robert Kuttner, the co-founder and co-editor of the American Prospect, thinks that the challenges with the ACA underscore that a public option would've been better after all.

What went wrong with healthcare.gov: A detailed, interesting interview between Slate's John Dickerson and David Auerbach.

When 30 hour workweeks might not be 30 hours: Jed Graham at the Investor's Business Daily goes deeper on the issue of whether Obamacare is leading firms to cut back hours for staff. 

Jess Perkins
"Americans who get coverage through employer-sponsored insurance plans will see no changes in 2014." Obama pushed the Employer Mandate out for one year. We won't know the impact on the Employer-sponsored plans until 2015 - it could be similar to what we are seeing in the individual market, especially if employers choose to push employees to the Exchanges.
Joey Torcellini
It looks like Blue Shield may have exited Alameda county prior to 2013. I just went to Ehealthinsurance.com and looked for 2013 policies in Alameda county and Blue Shield is not listed. Several years ago I was shopping for an individual policy and I was able to buy a Blue Shield policy. It looks like Blue Shield has since stopped issuing policies. As of May 23 2013, Blue Shield was listed as one of the Alameda county Region 6 carriers on the Covered CA website. BS was going to be issuing EPO policies. But by Oct 1, BS mysteriously disappeared from the Covered CA list of Alameda carriers. http://www.healthexchange.ca.gov/BoardMeetings/... Even if not on the Covered CA exchange, I do not see why Healthnet or BS could not write individual policies, outside the exchange, without subsidies.
Jonathan Savell
I didn't think that Blue Shield bailed out, did they? I know that Blue Shield (and later Blue Cross) were forced to delay their termination letters.
Joey Torcellini
Jonathan, Alameda county only has 2 carriers, which is much fewer than the surrounding counties. Kaiser and Anthem is all we get to choose from. The narrow networked Alameda Health Alliance is/was included in Alameda county, but was kicked off the exchange a few weeks ago due to some technicality. Example, San Mateo County has 4 carries - Anthem, Kaiser, Healthnet, Blue Shield. Santa Clara County has 5 carries - Anthem, Kaiser, Healthnet, Blue Shield, Valley Health. Since Healthnet was issuing individual policies in Alameda county before Covered CA was created, I don't see how/why Covered CA could force Healthnet out of Alameda county. IMO, Alameda county must be a losing proposition for Healthnet (and Blue Shield), and is why they bailed out of the county. I highly doubt Obama's recent rule change, to allow old policies to be reinstated, will bring back Healthnet.
Jonathan Savell
It is not known whether HealthNet didn't apply to insure these counties or wasn't selected by Covered California. All negotiations were conducted secretly and it is possible that Covered California did not want to give too many choices.

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