The stumbling rollout of the Patient Protection and Affordable Care Act just hit another hurdle: Widespread reports the law is forcing millions nationwide to lose their insurance plans.
NBC News sounded the alarm this week when it reported more than 7 million people will lose their coverage as a result of PPACA’s new standards, coupled with normal market turnover.
Sources told NBC News 50 percent to 75 percent of those who buy health plans on the individual market would receive a cancellation letter in the next year, if they haven’t already.
Though some seemed shocked by the news, a number of insurance experts say there’s nothing new about the reports.
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“We knew the market would be changing,” said John Greene, vice president of congressional affairs at NAHU, in Washington D.C. “I think what’s happened is that is D-Day is here and the new market reality is here.”
Greene said he couldn’t comment on the number reported by NBC in particular, but said PPACA has a big effect on existing plans, calling the changes to individual plans “intentional.”
PPACA requires all health plans to contain a basic level of benefits, such as preventive care services. Policies that don’t meet those standards won’t be permitted next year unless they existed in their current form in 2010.
For those in the know about the law, the numbers about existing plans were there all along, though they weren’t publicized before. Language in PPACA regulations from July 2010 stated “40 percent to 67 percent of people” in the individual market normally change plans in a year, and thus would no longer be in grandfathered plans.
“NBC ‘scoop’ cites ‘normal turnover in the indiv insurance market’. That’s a) not new b) not caused by #ACA c) the problem #ACA will solve,” White House principal deputy press secretary Josh Earnest tweeted Monday.
David Smith, vice president of health and welfare benefits at North Carolina-based Ebenconcepts, says the reports are overhyped.
First of all, he said, “some carriers aren’t canceling policies because of the Affordable Care Act; they’re canceling policies because they want to cancel policies,” he said.
It’s basic market turnover, he said, and that alone skews some reported numbers.
“From an efficiency perspective, [carriers] don’t need to carry 50,000 policies that have 50 people on them,” Smith said. “Is that always easy for people on them today? It’s not. But they have other options.”
Plus, Smith noted, some policies were sold in the last three years when the carrier already knew their policy would have to go away eventually because it didn’t meet PPACA requirements.
Smith also said that consumers, generally, will get richer, more comprehensive benefits with new policies that meet the new requirements, a similar point the White House made this week. With their cancellation notices, many carriers are issuing new policies to individuals, though premiums are naturally higher for the new plans.
But the cost might be worth it, some argue: For instance, a consumer might have previously had to pay for hospitalizations or maternity care out-of-pocket, whereas a new plan that meets PPACA requirements might cost more, but will cover those benefits.