Insurers To Cancel Thousands of Non-ACA Compliant Plans by 2015
Insurers are notifying thousands of U.S. residents that they will cancel their health coverage by the end of the year because the plans do not comply with the Affordable Care Act, Kaiser Health News/Washington Post reports (Appleby, Kaiser Health News/Washington Post, 10/2).
President Obama initially issued an administrative fix allowing individuals to keep health plans that did not meet the ACA's requirements in November 2013, following reports that millions of U.S. residents were being notified by their insurers that their existing health policies would be discontinued in late 2014 because they do not meet the requirements.
Earlier this year, the administration extended the administrative fix, which now allows people to renew such plans until 2016, with coverage lasting in some cases until September 2017 (California Healthline, 9/12).
Insurers Decide Not To Extend Non-Compliant Plans for Various Reasons
A number of insurers have decided not to extend non-compliant plans, including:
- Golden Rule, a subsidiary of UnitedHealth Group;
- Health Care Services Corporation;
- Kaiser Permanente; and
- Moda Health (Kaiser Health News/Washington Post, 10/2).
The reasons for the cancellations are varied, according to the Wall Street Journal (Radnofsky/Wilde Mathews, Wall Street Journal, 10/2). For example, reasons include:
- The chance for insurers to make more money selling ACA-compliant plans that often have higher premiums that could be subsidized by the federal government (Kaiser Health News/Washington Post, 10/2);
- Some insurers are pulling out of the ACA's insurance exchanges altogether;
- Maintaining old plans with different requirements and rate setups poses an administrative burden for insurers that some find is not justified by shrinking enrollment numbers (Wall Street Journal, 10/2); and
- Low payouts because enrollees in non-compliant coverage tend to be healthier and such plans often have higher deductibles (Kaiser Health News/Washington Post, 10/2).
According to the Journal, the Obama administration said the decision to cancel coverage rested entirely with insurers. HHS spokesperson Ben Wakana said that "private insurance companies operate in a free market: They may choose to discontinue change and replace plans so long as they let their enrollees know their options" (Wall Street Journal, 10/2).
Enrollees who lose their coverage can either switch to a different plan under the same insurer or shop around for new coverage during the upcoming open enrollment period, which begins on Nov. 15.
Fewer U.S. Residents Than Last Year Receive Notices
According to KHN/Post, it still is unclear how many consumers will be affected by the cancellations (Kaiser Health News/Washington Post, 10/2). The Journal reports that it likely will be tens of thousands of consumers (Wall Street Journal, 10/2).
However, that figure is lower than the two million U.S residents who received cancellation notices last year (Kaiser Health News/Washington Post, 10/2).
So far, Kaiser Permanente has sent cancellation letters to 3,414 consumers in Maryland and Virginia. In Kentucky, Humana is canceling 6,544 plans, while Golden Rule is canceling coverage for 1,161 consumers.
Meanwhile, HCSC began sending out cancellation notices to people in Oklahoma, Texas and New Mexico, but a spokesperson did not disclose the exact number (Wall Street Journal, 10/2).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.