Policy Feature Issue: Health Care in America – Issues with Cancellations and Coverage

The private insurance market has long been a pillar of our nation’s health care system.  According to a recent U.S. Census report issued earlier this fall, nearly 64 percent of Americans, 198 million, were covered by private insurance in 2012.[1] 170 million of those individuals were covered by employer-based coverage,[2] with the rest of Americans purchasing health insurance coverage through the individual market.[3]   In fact, one out of ten health insurance policies is sold on the individual market.[4]  However, over the last several weeks, millions of Americans in the individual markets have witnessed the termination of their health care plans.

Despite promises and assurances by the President over the last three years that Americans could keep their health care plan if they liked it, the Administration knew in 2010 that up to 93 million Americans in the private market could lose their current health care plan.[5] In fact, knowing of the need to drive individuals into the exchanges to make them financially feasible, the Administration specifically narrowed the interpretation of a grandfathered plan and acknowledged “that half of all employer health plans would lose grandfathered status by 2013 and the proportion of individual health plans losing grandfathered status would exceed the 40 to 67 percent range in a given year.”[6]

Why Is This Issue Important?

Now those predictions are playing out.  Millions of Americans are losing their plans.  In Florida, more than 300,000 cancellation letters have been distributed. In California, one million residents have received cancellation notices.[7] In New Jersey, 800,000 cancellations were sent according to the Star Ledger.[8] And, in West Virginia, 8,800 cancellation letters have already been sent.[9]  Employers are also beginning to feel the effects.  Small businesses from Phoenix to Philadelphia are hearing from their insurance carriers that their current small employer plans don’t meet Obamacare’s requirements and are being cancelled.[10]

Contrast this number with the inability of Americans to enroll in new private plans online. On Wednesday, the Administration announced that the federal exchange enrolled 26,794 Americans during the first month of open enrollment.  An additional 79,391 individuals were enrolled through the 14 state exchanges. The Administration had previously estimated that 500,000 people would enroll through the federal exchange. Moreover, the Administration knows that it needs seven million Americans in the exchange to make it financially feasible.[11]

Americans are rightfully upset. The President promised on multiple occasions that the only individuals who would be impacted by Obamacare were those who were uninsured. Now, the President has upended a system with which most Americans were content.

[2] See id.

[6] See id.