Late last year as many Americans purchased affordable health insurance for the first time, others opened their mailboxes to find notification that their coverage had been cancelled. The story erupted across media channels, as President Obama had promised that people could keep their plans, but the overall issue was presented with little perspective. Thankfully, a new study offers something that’s become seemingly rare these days: context.
Published in May in the journal Health Affairs, the study examined the stability of the nonemployer-based insurance market in the years before the Affordable Care Act to gauge whether the recent wave of cancellations was out of the ordinary or a typical feature of the individual health insurance market. (Quick background: People who received ACA-related cancellation notices had nongrandfathered plans that did not meet the law’s new minimum coverage rules.) To find out, author Benjamin Sommers, an assistant professor of health policy and economics at the Harvard School of Public Health, studied U.S. Census data from 2008 to 2011 on people ages 0 to 64 who reported buying health insurance that was noted obtained through an employer or union.
The big take-away? The individual insurance marketplace was already home to a high turnover rate, with only 42 percent of people keeping their plan after 12 months. Also, more than 80 percent of those experiencing coverage changes obtained insurance within a year, usually through an employer. In all, Sommers’ results suggested that 6.2 million people leave nongroup coverage every year.
“In this context, reports that recent cancellations of coverage may affect as many as 4.7 million adults (though precise estimates are lacking) are likely capturing a great deal of the normal turnover in the market,” Sommers wrote in the study. “The findings presented here also suggest that overall coverage rates in the United States are unlikely to fall as a result of these cancellations: Most people who left nongroup coverage in this study acquired other insurance within twelve months, even before the ACA offered increased coverage via the Medicaid expansion and tax credits for marketplace insurance.”
The study found that participation in the nongroup coverage markets was mostly “short-lived.” More than one-third of the study sample no longer had the coverage after four months. Within two years, only 27 percent still had the coverage. Younger people had the highest turnover rates, with only one-third of younger adults maintaining stable nongroup coverage for at least one year, compared to nearly 50 percent of older adults. Older adults, whites, self-employed people and people living in the West or Midwest experienced more stable nongroup coverage, while children, younger adults, blacks, Hispanics and people living in the Northeast experienced higher insurance turnover. Sommers wrote that people leave the nongroup marketplace for a number of reasons, such starting a new job that offers health benefits, qualifying for Medicaid or not being able to afford insurance anymore.
Still, some people did lose a plan that they had hoped to keep. To that, Sommers wrote that the ACA does offer new coverage options via Medicaid (in some states, anyway) as well as in the new insurance marketplaces. He also noted that 65 percent of his study sample had incomes below 400 percent of poverty, which means that many people who received cancellations would be eligible for subsidized, less expensive insurance plans in the new marketplace.
“These results can serve as a useful pre-ACA baseline with which to evaluate the law’s long-term impact on the stability of nongroup coverage,” the study stated.
To read the study in full, visit Health Affairs.
Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for more than a decade.