Obamacare Cancellations Create Major Holiday Headaches for Insurance Companies and Former Policy Holders

By Mary McCleary

The Obamacare disaster continues as many Americans are finding notices in their mailboxes from insurance companies to alert them that their plans have been cancelled since they are not in compliance with the Affordable Care Act (ACA).  With over 5 million individuals and families affected, it isn’t difficult to find people who are fretting this holiday season about their insurance – more in some states than in others.

The chart below details the number of cancellations by state based on the best and most recently available information.  With President Barack Obama’s recommitment to his oft-quoted promise, “If you like your health insurance plan, you can keep it,” some Americans will have their insurance restored for another year to give them more time to make transition to ACA compliant plans.  However, in spite of the President’s promise, many states, such as Washington, are not permitting cancelled plans to be reinstated.

In states that have accepted the President’s one-year reprieve, it is up to insurance companies whether or not they want to reverse the cancellations.  In New Jersey, where residents lost 800,000 plans, the largest provider Horizon Blue Cross Blue Shield will not accommodate those who want to continue their cancelled insurance.  In a statement made several days ago, the director of public affairs explained:  “Horizon BCBSNJ has been working to implement the Affordable Care Act for the past three and a half years, and undoing our work and essentially creating new plans in three weeks has proven to be impossible.”[1]  Given the time constraint and general uncertainty over Obamacare, it is difficult and expensive for companies to retool their systems to keep up with the whims of the federal government.

The true number of cancellations is still unknown.  Many states have not reported official numbers, and the cancellations in some states like Nebraska only represent those of Blue Cross Blue Shield.

Several states have largely avoided cancellations thus far because they had the foresight to allow insurance companies and their customers to renew their policies early.  Oklahoma Insurance Commissioner John Doak stated:  “Thankfully, we worked with the insurance industry and stayed ahead of the curve on this latest Obamacare fiasco… The President lied to the American public and it’s accountability time. He can’t just pass the buck to state insurance regulators.”[2]  Most Oklahomans will be able to keep their plans for another year while they shop around for new ACA approved insurance.

The cancellations this year are only the beginning.  In 2014, the Obama administration estimates another 78 million insurance employer-provided policies could be cancelled.  The American Enterprise Institute believes the number could reach 100 million.[3]

Those who have had their plans cancelled are finding that the options available to them through Obamacare are more expensive than their prior plans.  The cost, in part, is due to the fact that they are required to pay for services that they may not necessarily need or want, for example maternity care.  Additionally, since insurance companies can no longer deny coverage to anyone, they must factor the additional risk into the premiums they charge.  A quick search on the Internet will reveal the stories of many Americans for whom healthcare is less affordable now than it was prior to the government-run healthcare exchanges.

Compounding the issue of millions of people losing their plans, very few Americans have signed up for Obamacare.  Through the end of November, only 365,000 people had chosen plans through Healthcare.gov or a state-run exchange.  This number falls short of the anticipated 7 million citizens who were expected to enroll and is shockingly low given the millions of cancellation notices.[4]  Given current estimates, roughly one person has signed up for Obamacare for every 14 cancelled plans.  It remains to be seen whether more people will have insurance on January 1, 2014, than on December 31, 2013.

Though the insurance industry was not a model of perfection prior to the implementation of Obamacare, government intervention, while often well intended, only further compounds problems and increases government spending.  Obamacare has not been an easy road for government officials, insurance companies, or consumers.

In response to the chaos that many states and individuals are facing due to Obamacare, Insurance Commissioner John Doak noted, “State-based, free market solutions are best for the industry and for consumers.  The federal government overreach has gone too far.”[5]  This is the heart of competitive federalism.[6]  Healthcare decisions are better left to the states and their residents, not Washington, D.C.

 

Table:  Obamacare Cancellations by State

State	Exchange Type	Number of Cancellation Notices	Participating in One Year Renewal*	Source
AK	Federal	9,000		Link
AL**	Federal	87,000		Link
AR	Federal		Yes
AZ**	Federal	55,000		Link
CA	State	1,000,000	Yes	Link
CO	State	250,000	Yes	Link
CT	State	50,000	No	Link
DC	State	21,300		Link
DE	Federal	12,000		Link
FL	Federal	330,000	Yes	Link
GA	Federal	400,000	Yes	Link
HI	State		Yes
IA	Federal	1,000	Yes	Link
ID	State	40,000		Link
IL	Federal	185,000		Link
IN	Federal	108,000	No	Link
KS	Federal	10,000		Link
KY	State	280,000	Yes	Link
LA	Federal	93,000		Link
MA	State	150,000	No	Link
MD	State	73,000		Link
ME	Federal	8,500		Link
MI	Federal	200,000		Link
MN	State	140,000	No	Link
MO	Federal
MS	Federal	500	Yes	Link
MT	Federal	26,000	Yes	Link
NC	Federal	184,000	Yes	Link
ND	Federal	36,000		Link
NE**	Federal	45,000		Link
NH**	Federal	22,000		Link
NJ	Federal	800,000		Link
NM	State	26,000		Link
NV	State	25,000		Link
NY	State	100,000	No	Link
OH	Federal		Yes
OK	Federal	Minimal	Yes	Link

 

Table (Continued):  Obamacare Cancellations by State

State	Exchange Type	Number of Cancellation Notices	Participating in One Year Renewal*	Source
OR	State	145,000	Yes	Link
PA	Federal	250,000		Link
RI	State	0	No	Link
SC	Federal	150,000	Yes	Link
SD	Federal
TN**	Federal	66,000		Link
TX	Federal	Minimal	Yes	Link
UT	Federal	400		Link
VA	Federal
VT	State		No
WA	State	290,000	No	Link
WI	Federal	Minimal		Link
WV	Federal	8,800	Yes	Link
WY	Federal	3,100	Yes	Link
Total		5,680,600

* Many states have not taken an official position on President Obama’s extension.  This data is the most recently available from the Pew Center.[7]

** Cancellations in these states are only those from Blue Cross Blue Shield.