If you tried to get precise numbers about the late 2013 “plan cancellation” imbroglio, you’ll know it was extremely difficult.
No one really was sure about how many plans were canceled, how many would have been canceled even without the Affordable Care Act (there is a lot of “churn” in this market but not a lot of great recent statistics – much of it dates from 2003-04), how many people were quickly rolled into another plan offered by their insurer or how many had a higher sticker price for the new plan but were subsidized in the exchanges, etc.
The political climate – because critics of the ACA were very adept at highlighting unhappy “victims of Obamacare” – made it more difficult. And the fact that the federal HealthCare.gov enrollment site and several of the state exchanges were not working well at the time this all exploded added to the negative narrative. People receiving a plan cancellation letter, who were being told it was purely because of the health law and who couldn’t get online to check out other options were understandably anxious about ending up with no coverage.
So a recent study in Health Affairs is particularly useful. The money quote, after summing up the research: “This suggests that the nongroup market was characterized by frequent disruptions in coverage before the ACA and that the effects of the recent cancellations are not necessarily out of the norm.” (Reminder: AHCJ members get free access to Health Affairs.)
Let’s look more closely.
The study is by Benjamin Sommers, an assistant professor at Harvard School at Public Health who also advises the Office of the Assistant Secretary for Planning and Evaluation at HHS. He looked at the nongroup or individual market from 2008-11 using Census data.
He found that people tended to be in the individual market for short periods. One-third had such coverage for less than four months and nearly 60 percent had it for less than a year. One in four still had it after two years. People aged 19-35 had more turnover than older adults. The data doesn’t show whether they moved from one individual plan to another, or why, but it shows that someone was still in the individual market.
Who kept their plans – and therefore may have been most affected by the cancellations or nonrenewals? Older people, whites, the self-employed, and people in the West or Midwest.
Sommers relies on a Congressional Research Service estimate that 10.8 million people had nongroup coverage in 2012. (You may recall that some television news reports said 14 million would be canceled – more than the total market. Later reports settled at roughly 5 million cancellations). Given what Sommers’ research shows about people coming in and out of the market, he estimates that 6.2 million Americans typically leave nongroup coverage each year. (Some because they get other coverage through a job or a government program, some because they can’t afford the coverage or don’t want to spend the money.)
That means the change and fluctuation wasn’t out of the ordinary last year – although some of the people forced to change were not happy about it, and some may in fact be paying more than they were before. (Individual market plans are often skimpy – but not always. Some people did have good coverage ). As he writes, ”For some people who were covered by nongrandfathered plans, cancellations related to the ACA represent an unwanted change in coverage options that may be quite disruptive.”
What about the claims that the cancellations meant more people were losing coverage under the
ACA than gaining it? Given the late surge in enrollments in the exchanges, that seems highly unlikely. Sommers research – which predated the surge – found the numbers didn’t support the critics’ charges of a net loss of coverage. “Overall coverage rates in the United States are unlikely to fall as a result of these cancellations: Most people who left nongroup coverage in this study acquired other insurance within twelve months, even before the ACA offered increased coverage via the Medicaid expansion and tax credits for Marketplace insurance.”
Watch for more on the coverage numbers in my next post.
This CRS report is also useful in explaining how the individual market worked before and after the ACA. It notes clearly that there is no mechanism for counting “cancelled” policies. It also explains cancellations, rescissions and non-renewals.