Health Plan Cancellations Remain Uncommon Despite Concerns

With the Affordable Care Act (ACA)’s requirement that most nongroup health insurance plans and small-employer group plans offer minimum coverage standards, concerns arose about plan cancellations affecting those who already had insurance coverage.

An analysis from the Urban Institute determined that 18.6% of individuals in the nongroup health insurance market were informed in 2013 that their plans would no longer be offered in 2014 because the plans did not comply with the new requirements. However, evidence suggests that there were only a small number of canceled nongroup policies in 2014.

Authors Lisa Clemans-Cope and Nathaniel Anderson found that the majority of those with nongroup coverage (91.8%) had not received a letter about their health plan being cancelled. Overall, the estimated that of the 17.6 million people enrolled in the nongroup market, only 0.4 million reported their plan was being cancelled in 2015 because it did not comply with ACA requirements.

However, there were cancellations due to reasons other than the ACA. The investigators wrote that the nongroup market historically has high volatility and cancellations for business reasons, such as low enrollment, would not be unexpected.

Not only were cancellations low in 2014, but the authors also found confusion leading to coverage gaps following cancellation letters was lessened.

“In 2014, unlike in 2013, insurers canceling policies were required to inform consumers about coverage options in the Marketplace, the possibility of receiving premium and cost-sharing subsidies for a Marketplace plan, and the existence of special enrollment periods available if policies were canceled outside of the Marketplace open enrollment period,” they wrote. “Presumably, such information would help consumers transition to new, compliant coverage.”

The authors admitted that it is unknown how many enrollees are still in noncompliant health plans. However, given the fact that more than half of enrollees in the nongroup market were in plans that did not meet the ACA’s minimum coverage standards, they expect a substantial number of people are still in noncompliant plans.

“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,” according to Ms Clemans-Cope and Mr Anderson.