Wednesday, April 23, 2014

High turnover not unusual in individual health insurance market

Last October, as enrollment for the Affordable Care Act got underway, I wrote about some Charlotte-area consumers who were surprised to learn their individual health insurance policies were being cancelled because they did not meet the minimum requirements under the new federal law.

A political firestorm erupted as others across the country experienced similar problems and complained that President Barack Obama lied when he had promised Americans could keep their insurance policies if they liked them.

A new study in the journal Health Affairs reviewed that phenomenon and provides more context about patterns in the individual insurance market.

First, the study found this market has been characterized by high turnover before the Affordable Care Act took effect in January 2014. It found that only 42 percent of Americans who have non-group coverage retain that coverage after a year.

Another finding: 80 percent of those who leave non-group coverage end up with different health insurance within 12 months, most commonly through employer-provided coverage. 

The author concluded: "Given estimates from 2012 that 10.8 million people were covered in this market, these results suggest that 6.2 million people leave non-group coverage annually. This suggests that the non-group market was characterized by frequent disruptions in coverage before the ACA and that the effects of the recent cancellations are not necessarily out of the norm."


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