Fears that people with health insurance would lose coverage due to noncompliance plan cancellations apparently have not materialized — at least not to the extent some predicted.
A study by the Urban Institute, funded by the Robert Wood Johnson Foundation, delved into the question of how many people who were covered under small group plans received cancellation notices in 2014 from plan administrators because coverage didn't meet the minimum essential coverage requirements of the Patient Protection and Affordable Care Act.
While the researchers admitted pinning down an exact number was difficult, their methodology did produce what they considered to be a good estimate.
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The study "finds that 400,000 people with individual health plans — roughly 2.2 percent of all people who purchased health insurance on their own — had their policy cancelled due to the ACA. Just 0.3 percent of people insured through their employer, or about 500,000 people, similarly had their plans cancelled," said the report.
The results were based upon responses from participants to questions about whether they had received any letters or notifications whatsoever from plan administrators and, if so, whether the correspondence indicated their coverage had been cancelled. The study was designed to determine whether there was a replay of the cancellation crisis that erupted in 2013 that led to strong measures by the Obama administration to offset the cancellations with extensions for noncompliant plans, options for states to extend coverage, and grandfathering of other plans.
The short answer is no. The longer one: not as far as we know, but stay tuned.
"Recent evidence suggests a small number of canceled nongroup policies in 2014," the study said. "And though many states permitted continuation of noncompliant plans, cancellations were predicted in the small-group market in 2014 as small employers and insurers discover business or consumer reasons to shift enrollment to compliant plans. Yet evidence of significant numbers of small-group cancellations in 2014 has not yet surfaced. Thus, the extent of policy cancellations in 2014 caused by noncompliance with the ACA is largely unknown, making the extent of the disruption hard to assess."
But even for those who received cancellation notices, coverage tended not to lapse, the study also reported. So the overall impact was softened.
"People whose plans were cancelled had help transitioning to alternate coverage. Notably, insurers who cancelled policies were obligated to inform the policyholders of their marketplace options, and special enrollment periods provided an opportunity for people to enroll in a marketplace plan outside of the normal open enrollment window," the study said. "The number of enrollees still in noncompliant plans is unknown … However, we expect that though cancellations of noncompliant plans may continue through 2017, disruption should be limited because consumers are now likely to have access to information about coverage options and coverage through their state or federal marketplace."
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
