Obamacare’s detractors have argued that millions of Americans will lose their health coverage due to the changes introduced by Obamacare. But according to a new analysis, this ignores counterbalancing policies in the law. The report finds that less than 10,000 people will lose coverage coverage without an immediate and affordable replacement.
The paper, put together on behalf of ranking member Rep. Henry Waxman (D-CA) and other the Democrats on the House Committee on Energy and Commerce, takes as its starting pointa recent Associated Press report that 4.7 million Americans will see their current coverage cancelled. Critics of Obamacare have used this and other reports to play conceptual games, allowing the technical “cancellation” of a plan to imply a consumer will lose all coverage entirely and be left out in the cold. But for the vast major that 4.7 million, the cancellation of a plan simply means a shift into a new and often better form of coverage. The report lays out three ways this happens.
First, there’s the extended grandfather period. Even before Obamacare was enacted, health plans on the individual market — which usually operate on year-long contracts — changed on consumers all the time. Benefits could be altered or premiums jacked up. In order to give consumers more reliability, Obamacare placed much tighter controls on how and why insurers may charge different customers different premiums, and mandated a core package of benefits all plans must provide. Unfortunately, this also meant many pre-Obamacare plans that didm;t meet those new qualifications would have to be cancelled. In order to smooth that transition, the law allowed insurers to “grandfather” in certain pre-Obamacare plans by allowing them to be renewed for one more year at any point in 2013.
In November, the administration decided to extend that renewal period through 2014 as well. The extension was optional for regulators and insurers in each state, and some chose not to enact it. But of the 4.7 million in the AP’s report, 2.35 million — or half — will be able to take advantage of the extension.
Furthermore, the Democrats note that the other half can still sign up for plans that qualify under Obamacare. In briefings with committee staff, one of the country’s largest Blue Cross plans said they don’t expect any of their 2013 enrollees to be without coverage in 2014, and one of the country’s largest for-profit insurers said they’d sent actual cancellation notices to only 2,000 people nationwide, while the vast majority of their customers simply enrolled in Obamacare-compliant coverage.
Second, there’s Obamacare’s subsidies and Medicaid. In order to help Americans better afford coverage on the individual, Obamacare provides tax credits to anyone on the exchanges making between 100 and 400 percent of the federal poverty level (FPL). That’s between $23,000 and $94,000 for a family of four. Over half of all married couples made $75,678 or less in 2012. Obamacare also provided the states the resources to expand Medicaid to anyone making up to 138 percent of the FPL.
Citing analysis by the Kaiser Family Foundation, the Democrats’ report estimates that 60 percent of the 2.35 million who can’t take advantage of the extension will either qualify for subsidies or for the Medicaid expansion. That’s another 1.4 million out of the original 4.7 million cited by the AP. That number would be even larger if it weren’t for the states that refused the Medicaid expansion.
Third, there’s access to catastrophic coverage. Another failsafe built into Obamacare was the possibility of a “hardship exemption” for any American who faced serious hurdles in complying the law’s mandate that everyone purchase health coverage. In December, the administration decided that exemption applied to anyone who’d seen their previous coverage cancelled due to Obamacare’s policy changes. That means they won’t be subject to the mandate’s penalty, and that they’ll be allowed to purchase cheaper “catastrophic coverage” along with the Obamacare-compliant plans on the exchanges.
The new report found that of the 2.35 million who can’t renew their pre-Obamacare plans through 2014, 99 percent will have the option to buy low-cost catastrophic coverage.
Put those three overlapping policies together, and “the actual number of individuals who receive a cancellation notice, do not sign up for new insurance in 2014, and lack the option to do so at affordable prices will likely be less than 10,000.” As the Democrats’ analysis notes, that’s less than 0.2 percent of the original 4.7 million cited by the AP.
The fact is the plan “cancellations” were a regular occurrence on the individual market even before Obamacare, as customers saw plans changed or terminated and had to enroll in new ones. Studies have found that one third in the individual market left their coverage after only one year, and over 80 percent did not stay in their coverage longer than two years. The initial shift into coverage that complies with Obamacare can look like an acceleration of all that, but the law also introduced a host of new policies to make coverage more accessible, affordable and stable going forward.