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October 2013's Insurance Cancellation Firestorm In Context


Bethesda, MD—In October 2013, a political firestorm erupted when Americans with individual health insurance plans received cancellation notices from their insurers. Their plans had failed to meet the new minimum coverage standards of the Affordable Care Act (ACA) taking effect in January 2014. A new study, being released today as a Web First by Health Affairs, provides what news reports last fall failed to convey: context about the typical coverage patterns over time of those in the individual insurance market. The author examined US Census data for 2008–2011 (prior to when the ACA’s provisions took effect) and found this market was characterized by high turnover: every year an estimated 6.2 million Americans in nongroup plans moved out of nongroup coverage, and only 42 percent remained consistently enrolled in such coverage after one year. Another key finding: eighty percent of those leaving a nongroup plan ended up with different health insurance within twelve months, most commonly through coverage offered by an employer. The data showed wide variations across demographic groups, with whites and self-employed Americans most likely to retain their insurance policies, and those ages 19–35 the most likely to leave nongroup coverage. (Only 21 percent of this group retained continuous nongroup coverage for two years.)

Insurance Cancellations In Context: Stability Of Coverage In The Nongroup Market Prior To Health Reform

By Benjamin D. Sommers

Sommers is affiliated with Harvard School of Public Health, Harvard Medical School, and Brigham and Women’s Hospital.

The study will also appear in the May issue of Health Affairs.

The study confirmed the volatility of the individual insurance market. It also showed that some Americans—particularly those who were older and self-employed—typically retained their policies for three years or more. For them, said the author, “cancellations of nongrandfathered plans related to the ACA represented an unwanted change in coverage options that might have been quite disruptive.” However, the author also noted that the ACA creates a range of new coverage options. In addition to providing insights into the ACA’s cancellation controversy, the author suggests that his analysis can also offer “a nationally representative estimate of baseline coverage stability” in the nongroup market prior to the ACA.

About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically at The full text of each Health Affairs Web First paper is available free of charge to all website visitors for a one-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download our podcasts, including monthly Narrative Matters essays, on iTunes. Tap into Health Affairs content with the new iPad app.