Individual market cancellations might be less common than previously estimated

The health policy sphere is heady with talk of the administration’s recent extension of the “like it/keep it” fix, a measure intended to mediate disruption in the individual market. Researchers at the Urban Institute have been trying to parse the extent of this disruption, but tracking it is incredibly challenging—consistent data on the individual market is difficult to come by, even when underlying policies aren’t in flux. The market is more volatile than those for employer-sponsored and public insurance, since individual plans are often used as a bridge between gaps in other forms coverage.

A survey conducted by the Urban Institute in December 2013 and detailed in a recent Health Affairs blog post, suggests that a quarter of beneficiaries on the individual market received notices of cancellation in recent months; the majority of these plans reportedly did not meet new coverage requirements. These estimates translate to approximately 3.4 million cancellations nationwide (2.6 million due to inadequate coverage). This comes in far below the 4.7 million cancellations in 30 states that the Associated Press reported in late December. Given the timing—”like it/keep it” was first announced in mid-November—it’s unclear how many of these plans might be extended as a result of the administrative fix.

The conflicting reports highlight the trouble that policy commentators currently—and will continue to—face in parsing the impact of the Affordable Care Act. Estimates from the Urban Institute suffer from the problems inherent to self-report surveys and limited sample sizes. I followed up with Lisa Clemans-Cope, one of the authors of the blog post, to better understand the challenges inherent to their analysis. She wrote:

To give you a sense of our thinking about the potential sources of bias in our estimate—it could be that some people who got notices wouldn’t be renewing anyway because of other arrangements, so they wouldn’t consider their policies cancelled, and some people were offered some alternative from their insurer so they might not consider their policy cancelled. On the other hand, some people may be over-reporting cancellations due to ACA since the market has huge turnover historically. And while we know that people’s perceptions are not always completely accurate, in this case we do not have a gold standard to use for comparing and benchmarking our findings.

But the Urban Institute’s survey—and its attendant limitations—are clear, whereas the data underlying AP’s numbers are opaque. From the blog post:

First, the methodology used to collect and verify the data was not specified, nor were the methods used to determine whether a state was included or excluded from the estimate. The Washington State Insurance Commissioner recently criticized as “inaccurate” the statement that 290,000 people in the state had their individual policies canceled.

Second, the number of cancellations reported may include cancellations of both comprehensive health insurance and limited benefit plans. However, limited benefit plans, such as “cancer only” plans, are not an alternative to comprehensive health insurance and should not be included in the estimate.

Whichever number is closer to correct, millions of Americans is still a lot of Americans. Of course, any meaningful reform of health policy is going to disrupt the status quo in some not-insignificant fashion. The Affordable Care Act provides some buffer to disruption in the form of new financial assistance; the researchers also found that over half of those previously on the individual market—whether their plans were cancelled or not—will qualify for exchange subsidies or Medicaid:

While our sample size of those with non-group health insurance who report that their plan was cancelled due to ACA compliance is small (N=123), we estimate that over half of this population is likely to be eligible for coverage assistance, mostly through Marketplace subsidies. Consistent with these findings, other work by Urban Institute researchers estimated that slightly more than half of adults with pre-reform nongroup coverage would be eligible for Marketplace subsidies or Medicaid.

The cancellations—and the administration’s attempts to blunt their impact—will remain a source of fevered criticism and debate in the news. In a media culture already prone to anecdote, it’s a frustrating topic to grapple with in a hazy empirical context. Sometimes “frustrating” is the reality we’re stuck with.

Adrianna (@onceuponA)

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