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Families USA Report on Impact of Health Plan Terminations

Almost Three-Quarters with Individual Health Coverage to Become Eligible for Substantial Premium Subsidies or Medicaid

Less than One Percent of the Non-Elderly Population is at Risk of Losing their Current Insurance Plan and Paying More for Coverage under the Affordable Care Act

Washington, D.C. – Almost three-quarters (71 percent) of the people with private individual (non-group) health insurance have family incomes that will make them eligible for substantial premium subsidies or Medicaid under the Affordable Care Act (ACA). Conversely, less than one (0.6) percent of the non-elderly population is at risk of losing their current individual-market plan and paying more for coverage.

These are the key findings in an analytic report issued today by the health consumer organization Families USA.

Today, approximately 15.2 million people – 5.7 percent of the non-elderly population – receive their health coverage through private, individual (non-group) health plans. It is a portion of this group that has become the center of a controversy about the President’s remarks when he said everyone can keep the health coverage they like and wish to retain.

According to the Families USA report, over 10.8 million of the people with individual health coverage today are in households with incomes below 400 percent of the federal poverty line (approximately $46,000 in annual income for an individual, $94,200 for a family of four).

As a result, 71 percent of those currently with individual health coverage will be income-eligible for substantial premium subsidies or expanded Medicaid coverage—assuming their state decides to accept the federal dollars for expansion—through the ACA. The premium subsidies will reduce consumers’ annual premium costs by thousands of dollars, and most of those in Medicaid will pay no premiums at all.

The ACA prevents insurers from selling substandard plans. The ACA requires health plans to cover ten essential health services (such as hospital care, physician services, prescription drugs, and mental health care). It also prohibits insurance companies from placing annual caps in their payments for people with major illnesses or accidents, and it stops insurers from denying coverage or charging higher premiums for people with pre-existing or newly acquired health conditions.  

“The overwhelming majority of people with private, individual health insurance today will soon be able to receive better coverage and pay lower premiums due to the Affordable Care Act,” said Families USA’s Executive Director Ron Pollack. “As a result, their improved health coverage will become much more affordable.”

The private, individual health insurance market is extremely volatile. It is often referred to as the “wild, wild west” of health insurance. Only approximately one-third (35.5 percent) of those with such individual coverage retain it for more than one year.

The net result is that only a tiny portion of the non-elderly population, less than 1 percent (0.6 percent), are at risk of losing their current individual health insurance market plan and not becoming income-eligible for financial help.

The following is the basis for this calculation: Among the 5.7 percent of the non-elderly with individual health coverage, only 29 percent of them have family incomes above 400 percent of the poverty level and therefore are ineligible for premium subsidies, and only a third of them would be expected to stay in the individual market for more than one year. As a result, only 0.6 percent of the non-elderly are at risk of losing their current individual health coverage and not receiving financial help to purchase a new plan—approximately 1.5 million people out of 267 million under 65 years of age.

“Although President Obama was right to express his concern about, and to propose corrective action for, the people at risk of losing health coverage due to the Affordable Care Act, it is important to keep a perspective about the small portion of the population that might be adversely affected,” said Pollack.

“That number is a tiny fraction of the 65 million non-elderly people with pre-existing conditions who will gain new protections through the Affordable Care Act. It is also a small fraction of the tens of millions of uninsured Americans who can also get help through new health coverage. This perspective should be kept in mind as efforts continue to be made to mitigate any harm arising from plan teminations.”       

The Families USA report, “How Does the Affordable Care Act Affect People Who Buy Health Insurance in the Individual Market?” is available at http://www.familiesusa.org/ACA-individual-market/

Source:  Families USA

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