The Union Leader Pushes Misinformation About Policy Cancellations

The New Hampshire Union Leader hyped a report on insurers discontinuing policies to accuse President Obama of lying about existing health coverage, despite evidence which shows that health care coverage isn't being canceled as the Union Leader suggested and the decision to transition beneficiaries was made by insurance companies, not the president.  

The October 29 editorial relied on a NBC report that said the administration was aware of the fact many in the individual market would not be able to keep their plans, and asserted the president was “lying” when he said “if you liked your health insurance, you could keep it”:

When President Obama said in 2009 that if you liked your health insurance, you could keep it, he was lying. This was no secret. It was pointed out repeatedly at the time. U.S. Rep. Tom Price, R-Ga., an orthopedic surgeon and professor of medicine, did a whole Republican weekly radio broadcast on it back then.

Price and others pointed out that Obamacare created strong incentives for insurers to cancel people's coverage. That is exactly what has happened -- just as the Obama administration knew it would. 

As NBC News reported on Tuesday, “the administration knew that more than 40 to 67 percent of those in the individual market would not be able to keep their plans, even if they liked them.”

First, the idea that consumers are having their policies cancelled is misleading. As the Center on Health Insurance Reforms (CHIR) explained, an insurance company discontinuing a policy is not anything new and the term “policy cancellation” is a “misnomer.”  These plans are not being cancelled, rather insurance companies are “exercising [the] option to discontinue the policy at the end of the contract year.”

Currently, insurance companies generally have year-long contracts with consumers. At the end of the contract, companies can decide to no longer offer a specific policy -- which has nothing to do with the ACA. As CHIR further explains, under the Health Insurance Portability and Accountability Act (HIPAA), individual policies are “guaranteed renewable” but insurance companies can “increase premiums, increase cost-sharing, and/or reduce the scope of benefits covered.” The ACA allows companies to continue offering plans that do not meet minimum standards -- known as “grandfathered” plans -- if they were created before March 23, 2010. Yet, as ThinkProgress reported, given the naturally high turnover rate among individuals enrolled in the individual marketplace, it is highly unlikely individuals would be enrolled in the same plans from 2010 in 2014.  

As Sarah Kliff at The Washington Post explained, the number of grandfathered plans has steadily reduced since ACA's passage because insurance companies view them as a “dead end.” She explained: “They can't enroll new subscribers and are really constrained in their ability to tweak the benefit package or cost-sharing structure,” so many companies have instead made the business decision to drop the plans instead of retaining that coverage for their consumers.

Therefore, the Union Leader's accusation that the president lied about people being able to keep their coverage ignores the fact that under the law, people who liked their insurance could keep it, so long as their insurance company decided to retain that policy. Understanding changes in the insurance marketplace, the administration did predict that insurance companies would likely drop grandfathered plans. However, the changes to insurance plans are actually much better for consumers, as they will now have access to more complete coverage and access to tax credits that could result in lower premiums.

Prior to the ACA, private health insurance was referred to as "Swiss cheese" coverage because insurers could create policies with policy holes that would never pass employee benefit standards. These inferior insurance plans have failed customers in the past and helped inspire the minimum benefit coverage under the ACA, including a prohibition against increased premiums due to illness and the ability to get insurance even with a pre-existing conditionAccording to the CHIR:

For most people shopping on the marketplace, the policies available there will be a better value than anything they have been able to buy on the individual market. First, they will no longer have to worry that if they get sick, their insurer will jack up their premium - that's prohibited under the ACA. Second, many will be eligible for premium tax credits to make their plan more affordable. And, as noted above, all the plans will meet minimum standards for benefits and cost-sharing - no more swiss cheese coverage.

As the Department of Health and Human Services explained in a release, six out of 10 Americans who enroll in coverage on the exchanges could find plans that cost less than $100 per month, all that include the 10 essential health benefits mandated by law.