President Obama has broken his promise that Americans who like their health insurance plans can keep them under the Affordable Care Act. Citing the new law, insurers have recently mailed policy cancellation notices to hundreds of thousands of people across the country, providing more ammunition to critics who say the law is bad for consumers. And that number may grow. NBC News reported on Monday that half or more of those who buy coverage independently may be forced to switch plans in 2014.
But the truth is that only a small percentage of Americans will have their health insurance choices narrowed because of the ACA. Approximately 15 million Americans who currently buy health insurance on the open market will see substantial changes to their choices of plans for 2014. Such changes are common on the individual market, but the new health care law will lead to an increase. The rest of the insured population will see very few changes as a result of Obamacare. Here’s why: about 30 percent of the population currently has health coverage through Medicare or Medicaid, public insurance programs in which benefits will continue mostly unchanged. Another 50 percent of Americans get coverage through employers and already have no choice whether they can keep the exact same insurance plan and price structure year-to-year. That decision is made by employers, who offer employees a pre-determined menu of plans and prices.
Obama’s promise of coverage continuity has been broken for those who currently buy private plans on the open market, but many may be better off. The individual health insurance plans being cancelled this fall are generally being discontinued because they do not meet new ACA standards for insurance. The law requires that plans cover a package of what the federal government defines as “essential health benefits.” These include basic categories of care, including hospitalization, emergency care, maternity services, mental health services and prescription drugs. The law also limits out-of-pocket spending and bans insurers from setting various annual and lifetime limits on coverage. (To balance the increased cost of covering these services, some insurers have narrowed the provider networks for plans being offered under the ACA.)
These new standards will lead to more comprehensive coverage for many people. Previously, many plans sold on the open market offered coverage so skimpy that it did not protect consumers from financial ruin. More than 60 percent of all personal bankruptcies in the U.S. in 2007 were due to medical bills. Of those who declared bankruptcy due to medical costs, about three-quarters had health insurance.
As the law’s proponents are fond of noting, in many cases, more expensive coverage will actually cost the same or less than less comprehensive plans offered in the past. Those purchasing coverage on their own through the law’s insurance exchanges will be eligible for new federal subsidies if their earn up to 400 percent of the federal poverty level, about $46,000 for an individual and $95,000 for a family of four.
Yet, many of those receiving insurance cancellation notices do not know if they are eligible for federal subsidies to buy new plans. The federal web site managing insurance enrollment in 36 states continues to be slow or non-functioning. White House officials say the site, healthcare.gov, will be fully operational by the end of November. Until then, the site’s lack of usability will continue to be a practical problem for consumers and a political problem for the White House.
On Monday, CBS News broadcast a report about a 56-year-old Florida woman named Dianne Barrette, whose BlueCross BlueShield policy is being cancelled due to the ACA. According to the report, Barrette pays $54 per month for her current policy and was offered a replacement plan costing $591 per month. Reached by phone, Barrette said her current plan, called GoBlue, covers doctor visits, but does not pay for many basic services, like hospitalization, that are mandatory under new ACA standards.
“I do have to find something with more coverage than what I have now as I’m getting older,” she told TIME. “I just grabbed this because it was something I found useful for the time being.” Barrette said she earns less than $46,000 a year, meaning she would likely be eligible for new Obamacare subsidies to cut the cost of enrolling in a new comprehensive insurance plan. But, said Barrette, “I tried to go on the Obama web site and of course I can’t get on. I don’t know where to go from here. It’s kind of frustrating.”