New ACA Fracas: Did the White House Know People Would Face Insurance Cancellations?

"if you like your health plan, you will be able to keep your health plan."

That's been President Obama's talking point since 2009, before the Affordable Care Act was passed in 2010.

But millions of Americans are receiving notices of policies being cancelled, NBC reported on Monday night and — citing four unnamed sources "deeply involved in the Affordable Care Act" — further argued that the administration has known this would happen for the last three years.

From NBC:

None of this should come as a shock to the Obama administration. The law states that policies in effect as of March 23, 2010, will be “grandfathered,” meaning consumers can keep those policies even though they don’t meet requirements of the new health care law. But the Department of Health and Human Services then wrote regulations that narrowed that provision, by saying that if any part of a policy was significantly changed since that date — the deductible, co-pay, or benefits, for example — the policy would not be grandfathered.

Buried in Obamacare regulations from July 2010 is an estimate that because of normal turnover in the individual insurance market, “40 to 67 percent” of customers will not be able to keep their policy. And because many policies will have been changed since the key date, “the percentage of individual market policies losing grandfather status in a given year exceeds the 40 to 67 percent range.”

That means the administration knew that more than 40 to 67 percent of those in the individual market would not be able to keep their plans, even if they liked them.

All of the sources said that many of those who receive cancellation notices will experience sticker shock when migrated to a new policy. State of Health has reported on these situations, including Mark Brown of San Jose who is seeing an increase of 90 percent.

(Just to reiterate -- this is the individual insurance market. In California, that's about two million people or about 6 percent of the population.)

Meanwhile, the White House is firing back. Josh Earnest, special assistant to the president, said on Twitter:

NBC "scoop" cites "normal turnover in the indiv insurance market". That's a) not new b) not caused by #ACA c) the problem #ACA will solve.

— Josh Earnest (@jearnest44) October 28, 2013

Politico added nuance to the story, saying that while many consumers will see their policies cancelled, "how directly that's related to the law can be debated."

More from Politico:

The law requires insurance plans to meet basic standards after 2014. If they don’t meet those standards, insurers can no longer sell those plans unless they are “grandfathered” – or they existed before 2010 and haven’t changed at all since then.

So, if an insurer changed a premium or a deductible in 2013, the plan is no longer grandfathered under Obamacare and can’t be renewed in 2014.

The White House says it’s not forcing anyone off those plans – the insurers are if they change their policy and it loses its grandfathered status.

ThinkProgress notes that "40 to 67 percent might lose their grandfathered status" sounds "ominous" but:

The debate was widely covered in the press, so it’s unclear what exactly the NBC investigation unit has uncovered.

The goal of grandfather regulations is to allow a consumer to keep their existing policies, while also ensuring that there are some basic patient protections built into these plans. If insurers make changes that significantly burden enrollees with lower benefits and increased costs they have to come into compliance with all consumer protections. Therefore, policies lose their grandfathered status if insurers cancel coverage when a person becomes ill, impose lifetime limits on benefits, eliminate all benefits for a particular condition and reduce the cap for covered services each year, among other changes. (In fact, in November of 2010, the federal government loosened some of these standards.)

So yes, individuals can keep the plans they have if those plans remain largely the same. But individuals receiving cancellation notices will have a choice of enrolling in subsidized insurance in the exchanges and will probably end up paying less for more coverage.

Yes, many people will be eligible for subsidies. In California, as many as half of the two million people currently buying insurance on the individual market will be eligible. What's unclear is what happens to the other million Californians.

As noted above, Mark Brown's policy was cancelled and the new one offered by Kaiser has essentially the same benefits — but for nearly double the price.

"There are going to be winners and losers whenever they deploy something like this, and I’m in the loser category at this point," Brown said.