END OF 2018 OPEN ENROLLMENT PERIOD (Connecticut & Maryland)

Time: D H M S

Imagine That: Only 400K individual policies cancelled for noncompliance in 2014 after all

Remember all the fuss and bother back in 2013 over OMG!!! ELEVENTYGAZILLION POLICIES CANCELLED DUE TO OBAMACARE!!!?

Remember how the number of people having their policies cancelled due to not being compliant with minimum Affordable Care Act standards supposedly totalled anywhere from a somewhat reasonable 4-5 million to an absurd 17 million, depending on whether the rightwing source screaming about it was of the rational or batsh*t insane variety?

Well, in the end, it appears that it was only 2.6 million people at most, according to a study by the Urban Institute at the time. However, even that number may be too high, because it also turns out that a lot of people whose policies were originally cancelled were later reinstated after the backlash caused President Obama and the HHS Dept. to allow states to extend those non-compliant policies by 1, 2 or even 3 years.

Now, I don't know whether the 2.6 million noted in the Urban Institute study includes those whose policies were reinstated or not. The study was done in December 2013 (after the extensions were announced), but the actual wording of the question at the time was:

"Did you receive a notice in the past few months from a health insurance company saying that your policy is cancelled or will no longer be offered at the end of 2013?”

You see the problem here. It doesn't ask whether their policy was actually cancelled or not, just whether they received a notice that it was (followed by a later notice rescinding the original one).

In any event, in response to the extension waiver, some states refused to allow any extensions; some allowed a 1 year extension, some allowed 2 years and some allowed the full 3 year extension. Even within the states allowing extensions, some insurance companies in turn extended their polices while others didn't (or aren't for the full 3 year period).

That means that some number of additional policies were cancelled for noncompliance in 2014, and some more will be at the end of 2015 and, finally, 2016 as well...which brings me to today's story from Bruce Japsen of Forbes:

About 2.2 percent of Americans who purchased coverage on their own, or 400,000 people, had individual policies cancelled, according a new analysis from the nonpartisan Urban Institute. And just 0.3 percent of  Americans with coverage through their employer, or 500,000 people, had their health insurance policies cancelled in 2014, the Institute said. Authors of the issue brief, funded by the Robert Wood Johnson Foundation, said there was no evidence of a significant number of policy cancellations in either the self-insured or small group markets.

In other words, even that's perhaps 900K people total for 2014, including both the individual and employer-sponsored insurance markets (the study itself notes that "Although the cancellation issue primarily affects small-group insurance, the sample sizes for this analysis do not allow us to distinguish between small- and large-group employer insurance"). If you're just talking about the individual/family market (which was what the primary freakout was about in in 2013 and last fall), you're only talking about 400,000 people or so.

Which, as it happens, is even fewer than I thought it would turn out to be for 2014:

Does that mean that only 50,000 will have to replace their policies with new ones this fall? Of course not; using a strict percent-of-population ratio (30 million vs. 316 million) suggests that it could be up to half a million nationally.

So, what about this year and, finally, the end of 2016? Well, on the one hand, a lot more states took the 3 year extension than the 0, 1 or 2 year options, so the number cancelled at the end of 2015 could go back up again.

On the other hand,, considering that the churn rate in the individual market has always been extremely high anyway...

Relying on data from the Census Bureau's Survey of Income and Program Participation for his study, Sommers used a sample of 4,199 respondents under 65 years old with nongroup coverage in their first month in the survey.

Over one-third of those respondents no longer had nongroup insurance coverage after just four months, Sommers found. Just 42 percent had stable nongroup coverage after one year. After two years, just 27 percent had stable coverage.

...the odds are also very good that by the time the final 3-year extension period wraps up, there may not be a whole lot of people left on those noncompliant plans anymore anyway.