Unless you’ve been living under a rock, by now you’ve probably heard that a lot of people are having their health insurance plans cancelled next year by their insurance company. And yes, President Obama promised everyone that if they liked their plan, they could keep their plan.
The President apologized for that statement on Thursday – one he never should have made by the way; we all know that nothing in life is guaranteed except for death and taxes – and he offered a solution by stating that policyholders could keep their insurance plan for another year if they so choose.
Well… there’s just one problem. Actually three problems.
1. Obama’s decision has no actual regulatory bearing on insurance companies. In other words, if the company wants to terminate your policy even if you want to keep it, it can still do so. There’s absolutely no incentive for insurers to keep those policies around.
2. Insurance is regulated at the individual state level, meaning that state regulatory agencies will have to approve the extension of the cancelled plans. There’s no official word yet on which states are likely to do that and which are not.
3. Policyholders actually have to renew their plans. Depending on when the termination letter was received, some of these people may already have signed up for other plans, not thinking that the President would allow this “get out of jail free” card to appease angry citizens.
There’s also a few things to remember about the cancelled plans and the health exchange enrollment numbers.
1. The cancelled plans only affect about 5% of people with health insurance. And for most of those people, the policies they had were terrible insurance policies (I said most, not all). The policies were terminated because they didn’t comply with the basic requirements of the Affordable Care Act; many only offered “catastrophic” coverage but no routine coverage or coverage for preventative services. They’ll probably find better plans on the exchanges.
2. The enrollment numbers are low and quite frankly look bad. Some of the low numbers certainly have to do with the problems plaguing the healthcare.gov website, but if history serves as a good guide, we should expect the numbers to be low. The chart below depicts enrollment in Massachusetts after it required residents of the Commonwealth to obtain health insurance. Initial enrollment was paltry at best but ramped up quickly as the deadline to purchase insurance or pay a tax approached. We should probably expect the same for the Affordable Care Act as the March deadline approaches as well. One can only hope the website will be fixed by then.
3. Enrollment in Medicaid has been rather robust, partially contributing to the low enrollment on the exchanges. People who are newly eligible or were always eligible for Medicaid and never knew are enrolling like crazy.
4. And lastly, and I’ll admit this is a completely partisan comment, the GOP would like to repeal the Affordable Care Act and return to the business as usual plan. This last graph from CNN shows that the “business as usual” plan wasn’t working so well for a lot of people. Projected spending on health care by 2029 was almost 50% of family income prior to the passage of the Affordable Care Act
The law is certainly not perfect, and the website is definitely a disaster (although I tried it yesterday and it seemed to be working okay). But relax people; as with any new major piece of legislation, there are going to be kinks to work out.