Health insurance policy cancellation concern overblown, study maintains

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The past week has been punctuated with political back-and-forth and acute state regulator woes on the question of what to do about previously canceled health insurance policies, now up for 2014 renewal thanks to a White House announcement. However, this level of attention is unwarranted, authors of a study from Families USA say.

A nonprofit advocacy organization and strong supporter of the Affordable Care Act, Families USA asserts that fewer than 6% of Americans younger than 65 have individual health plans, and most won’t lose coverage without a light at the end of the tunnel.

According to the report, 71% of the 15.2mn individual policyholders in the US have incomes at or below 400% of the poverty level. That means they should be eligible for expanded Medicaid subsidies and other tax credits under the ACA.

Ron Pollack, executive director of Families USA, told reporters on a conference call that the report indicates just 0.6% of non-elderly Americans will lose their individual plan without being offered financial assistance in buying a new one. He emphasized that just 35% of individual policyholders retain ongoing coverage for more than a year, meaning that most individuals who received cancellation letters wouldn’t have kept their policy anyway.

“This issue has been blown out of proportion,” Pollack said Thursday.

Pollack did acknowledge that in many cases, individual plans offered under the ACA will be more expensive than policyholders’ past coverage, but said that better coverage would lower out-of-pocket expenses, balancing out the difference.

The report did not comment on the effect of renewing previously canceled plans on exchanges created under the ACA. State insurance regulators and carriers have expressed fears that renewing these policies will mean fewer healthy individuals will enter the marketplace, driving up rates for everyone.

However, Dan Heffley—an expert on high risk pools with the National Association of Health Underwriters—sees that as an unlikely scenario.

Heffley echoed Pollack’s assertion that individual policyholders account for a small percentage of Americans, adding that “generally, it’s not the most profitable demographic.”

“Those people tend to be people that need insurance and can’t get it elsewhere,” Heffley said.

  • Chuck Tiedje on 11/25/2013 10:08:24 AM

    This report totally ignores that fact that virtually every employer is being forced to reduce, eliminate, or increase employee-paid premiums on benefits provided by their employer-sponsored plan. It's another example of intentional "spin" to make the disaster of ObamaCare appears to be beneficial.

  • vince phillips on 11/25/2013 3:09:30 PM

    Where is the news in this article? Families USA is the biggest apologist for the Affordable Care Act around. I'll bet if you ask them, they'll say that the rollout was not bad, just a hiccup or two.

  • Terry Welty on 11/26/2013 6:52:29 AM

    Tell that to my clients that have received notice that their policies are being cancelled and the options are pay a lot more for a lot less... but I'm a "Bad Apple" agent... At least they are consistent... they have lied about everything regarding the act from day one.

  • Terry Welty on 11/26/2013 6:55:57 AM

    Oh and they just got a million dollar check to "Spread the Word" about how great Obamacare is... consider the source!

    Families USA has received a $1 million grant from the Robert Wood Johnson Foundation, which it will use to collect and distribute to the media personal stories of those who have benefited from the new health insurance exchange rolled out by the Obama Administration October 1. The announcement is good news for the President, who has been widely criticized for the horrible launch of the online marketplace

    Read more: Families USA Receives $1 Million Grant to Tell Pro-ObamaCare Stories |

  • Ray on 11/27/2013 11:10:10 AM

    According to our insurance department no policies are being cancelled. They are being discontinued because they don't meet the ACA requirements for minimum coverage like in mental health parity or maternity.

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