As the dust settles following the tumultuous launch of the Affordable Care Act, many people are benefiting from the law, which, on balance, seems to be accomplishing its goal of providing health insurance for more Americans.
But a significant minority of Americans has ended up worse off under Obamacare, as the law is known, because policies they were happy with got canceled. Most of those people had purchased individual policies that didn’t meet new requirements under the law, so insurers were required to cancel them. People who lost coverage were free to purchase a new policy, but in many cases that was considerably more expensive.
A new study in the journal Health Affairs by Benjamin D. Sommers, a professor at the Harvard School of Public Health, provides fresh details on people who lost coverage on account of Obamacare, a group that may have totaled nearly 5 million Americans. But the majority of those people probably would have switched insurance anyway in 2014, even without the new law, according to the study. Most of them probably got new policies, so they're covered now. And many switchers who got a new policy through one of the healthcare exchanges set up under Obamacare probably got a better deal than they would have before the law.
"An unwanted change"
But there are three subsets of people whose policies were canceled and who are likely to end up as losers under Obamacare — people who are self-employed, over 35, white, or some combination of all three. People in this smaller group were far less likely to switch policies on their own, since they were generally happy with their coverage and less likely to change their employment status, one big reason people typically drop an individual policy. For this group, “cancellations related to the ACA represent an unwanted change in coverage options that may be quite disruptive,” the Health Affairs study concludes.
Jim Stadler, a 50-year-old freelance writer who lives outside Charlotte, N.C., got a notice from his insurer last fall saying his family’s policy would be canceled because it didn’t meet all the new requirements under the ACA. Stadler was happy with that policy, which kept costs down and provided access to good doctors. After several fits and starts, his insurer, Blue Cross Blue Shield of North Carolina, was able to offer a similar policy — but the premium rose from $411 per month to $540, a 32% increase. “I’m giving an insurance company money I could be spending on groceries or durable goods or other things,” says Stadler. “I’m paying more, and for what, I don’t know.”
It’s hard to pin down the number of people stuck in predicaments such as Stadler’s, but the Health Affairs study suggests about 3 million self-employed people had individual policies before Obamacare went into effect, with some of them losing insurance. A recent Rand survey found that the number of people who had individual policies last year but are uninsured this year is less than 1 million, on net. But that survey didn't reveal whether people gave up their policies because of Obamacare or some other reason. And since all these numbers measure different groups of people, it's hard to figure out exactly how many lost insurance because of Obamacare, and remain uninsured.
Whatever the number, it's a tiny portion of the roughly 200 million Americans covered by private insurance. Yet the furor over canceled policies last year had an outsized impact on public opinion toward Obamacare — which fell sharply right around the time cancellations were becoming big news. The flap even earned President Obama the most dubious distinction of his presidency: the “Lie of the Year” award from fact-checking site Politifact, for his claim that, if you like your insurance, you can keep it.
The biggest Obamacare losers are people who lost their insurance but are unlikely to qualify for subsidies through one of the new exchanges, which require an income of less than $47,000 for an individual or $95,000 for a family of four. So they’re the ones who lost coverage and probably have to pay more for a new policy, even if they enroll through an exchange. Some people who lost coverage report paying twice as much for a new policy, or more.
It just so happens those demographic groups hurt most by Obamacare tend to be Obama’s political opponents. Whites are more likely to say they’re Republican than Democrat, by 34% to 28%. People under 35 — one group more likely to benefit from Obamacare — lean strongly toward the Democratic party, while that edge evens out among people over 35. And among small-business owners — a big chunk of people who consider themselves self-employed— Republicans outnumber Democrats by as much as 3 to 1. Stadler, for one, voted for Obama in 2012 but has since helped promote anti-Obamacare campaigns.
There’s no reason to think Obama and other backers of the ACA deliberately targeted Republicans when they made decisions that would determine winners and losers under the health reform law. It seems more likely Obamacare architects, thinking in broad, public-policy terms, simply failed to anticipate the firestorm that would erupt over canceled policies. To many of the law's drafters, the ACA would bring a net improvement in healthcare coverage. And those who ended up paying more, they reasoned, would be getting better insurance.
After the huge flap over canceled policies last year, Obama did reverse himself and said insurance companies can continue to offer non-compliant policies for a few more years. He also said people whose policies got canceled would not have to pay the fine in 2014 for violating the individual mandate.
That’s cold comfort to cancelees, however. Many insurance companies declined to reinstate canceled policies, and an exemption from this year’s fine still doesn’t compensate for affordable coverage that was lost. For them, the cure, so far, doesn’t seem much better than the disease.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.