Only 14 percent of Americans were able to keep these individual market plans for two years before Obamacare became law.
Opponents of President Barack Obama’s health care law are quick to evoke the plight of potentially millions of Americans getting hit by cancellation notices from their health insurance companies due to new coverage requirements under the Affordable Care Act. All of a sudden, Republican critics sound like members of the consumer-first "party of Ralph Nader," quipped Van Jones, the Democratic co-host of CNN’s Crossfire, during a panel discussion on ABC’s This Week. "They're the biggest consumer protection operation in the world now, but six months ago we had people who were getting these same cancellation notices and the Republican Party was silent," he said. "There's a problem when you're indifferent to the losers the last time. I want to make one thing perfectly clear. You look at the numbers here. Fourteen percent, only 14 percent of Americans were able to keep these individual market plans for two years before." Is his figure about the volatile individual market accurate? First, understand that consumers who seek health insurance coverage on their own are not the norm in this country. Most people are covered by their employer or Medicaid or Medicare. Another 16 percent are uninsured. About 6 percent, or 15 million Americans, are in the individual marketplace, which will be the most affected by the new law. That was intentional. After the show, Jones told PunditFact that the individual marketplace is a "wild, wild west" where people were denied coverage for pre-existing conditions and policyholders were continually dropped by insurers offering thin, sketchy coverage. The people in this unstable market are a transient bunch, signing 12-month contracts with insurers as they move between jobs or lose coverage they once had. When their contract is up, the insurer can discontinue a policy or change it. If they end it, federal law says they have to give policyholders 90 days notice and the choice to sign up for different coverage. "Current policyholders are not having their current policy canceled – rather, the insurance company is exercising its option to discontinue the policy at the end of the contract year," according to Georgetown University’s Center on Health Insurance Reforms. And now, if healthcare.gov straightens out, they can purchase new coverage there. The health care law’s authors wanted to make sure people in the individual marketplace had access to the same standardized coverage as everyone else. As a result, new policies created after the health care law passed in March 2010 must cover "10 essential health benefits," such as preventive care, ambulatory service, and maternity and newborn care. Because many of these individual plans don’t offer that, and they weren’t eligible to be "grandfathered" under the new law, the insurers are shedding some of them. It’s a lot to take in, but it’s all part of the complicated before-and-after picture that Jones was trying to paint for viewers about the benefits of the much-maligned health care law. As for his stat that "only 14 percent of Americans were able to keep these individual market plans for two years" before the health care law, Jones told us he was a little off. He meant to say 17 percent, a reference to a finding in a 2004 study published in the journal Health Affairs that was recently highlighted in a Washington Post explainer about the policy cancellations. The study examined coverage patterns in the individual insurance marketplace from 1996-2000 -- quite some time ago. The key finding for our purposes is this: "Roughly one-sixth (17 percent) of those with individual insurance coverage retained it for more than two years." The reason? Not because of insurers canceling plans like Jones suggested. Though insurers do cancel coverage, the study determined that most of the volatility with enrollment and dropped policies had to do with policyholders moving between employer coverage, with a median enrollment length of eight months. The people who kept their insurance the longest were small business employees or self-employed, the study found. So Jones is close on the number. But Timothy Jost, a Washington and Lee law professor, says the number does not exactly mean what Jones said it does. Jones is saying it’s the fault of insurance companies that most people could not hold onto their coverage, but the reality is less known. It’s probably not accurate to pin it all on insurers canceling the plans, Jost said, though no one knows for sure how much of the churning has to do with insurers and people canceling their plan or choosing a new one. "He does have a point, but I wouldn’t have said it that way," Jost said. "It’s a market that has just not functioned very well. ... It’s long been the case that people just come and go from the market all the time." Other health policy experts found Jones’ remarks confusing. Yes, the market tends to be volatile due to high administrative costs and the inability to pool risk among healthy and sick patients like large employer plans, said Gail Wilensky, who ran Medicare and Medicaid under President George H.W. Bush. "Does he think Republicans should have complained about the volatility in the individual market before this? That only makes sense if they have a solution to the problem," she said. U.S. Department of Health and Human Services Secretary Kathleen Sebelius referenced another 2004 study by the Kaiser Family Foundation in an online column meant to offer some calm around the cancellation notices for individual plans. The study said about 45 percent of policies remained after two years, a much higher estimate though its sample did not include short-term health insurance policies that are often bought to cover gaps of three to six months. Our ruling Jones said, "Only 14 percent of Americans were able to keep these individual market plans for two years" before Obamacare became law. He was trying to make the point that canceled policies have been the norm in the individual insurance market long before the Affordable Care Act. His figure is 3 percentage points off of a 2004 study that found only 17 percent of individual policyholders kept their plans for more than two years. More importantly, though, a health policy expert said Jones probably went too far in indicating that insurance companies were to blame for the high turnover. Many people enter that market for the purpose of buying short-term protection. That means people in the individual market might be dropping the health insurance plan they have as much as insurance companies might be canceling the plan altogether. We rate the statement Half True.
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