News that health insurers are ending the policies of what might be millions of Americans has rattled consumers and added to the debate over the health care law.
No one knows how many of the estimated 14 million people who buy their own insurance are getting such notices. Here's a guide to help you understand the bigger picture.
Why are these cancellations happening?
The health care law targeted the so-called individual market because it didn't work well for many people who don't get coverage through employers, particularly those who were older or had health problems. The latter often were rejected for coverage, were charged more or had their conditions excluded from coverage. Some policies provided only the barest of coverage when someone did fall ill.
Starting Jan. 1, insurers no longer can reject people who are sick or charge them more than the healthy under the Affordable Care Act. They also must beef up policies to meet minimum standards and must add benefits such as prescription drug coverage, maternity care and mental health services.
If you got a cancellation notice, most likely your plan didn't meet all the new standards. One type of policy being discontinued by Florida Blue, for example, didn't cover hospitalizations or emergency room visits and paid a maximum of $50 toward doctor visits.
It's possible that your plan also had deductibles and other potential expenses — such as co-payments for doctors and hospital care — that exceeded the law's annual out-of-pocket maximum of $6,350 for individuals or $12,700 for families.
Some policies that fail to meet the law's standards may still be sold if the insurer decides to continue them and if they're "grandfathered," meaning that you purchased one before March 2010 and neither you nor the insurer has made any substantial change since then. Adjusting an annual deductible, which many people do each year to keep premiums down, is a change that could end grandfathered status.
How are insurers picking the policies to discontinue?
Some consumers fear they're being targeted because they're unhealthy or otherwise unprofitable for an insurance company. Kansas Insurance Commissioner Sandy Praeger said insurers could discontinue only entire blocks of business and couldn't pick and choose certain customers to cancel. Those whose policies are canceled may sign up instead for new plans and can't be rejected because of their health. Insurers say they're ending policies that don't meet the law's standards or weren't grandfathered.
My insurer says that if I renew before the end of the year, I can keep my current plan. What does this mean?
In some states, insurers are offering selected policyholders a chance to "early renew," meaning they may continue their existing plans through next year, even if they don't meet all the law's standards. If you choose this option, your premium might still go up, but the cause would be medical inflation, rather than the need to add benefits because of the health law. Not all states allow early renewals. Fearing that insurers would offer such renewals only on their most profitable plans, a handful of states — including Illinois, Missouri and Rhode Island — barred insurers from doing it.
I'm healthy. Why do I have to pay for people who are sick?
Except for a fortunate few, everyone is likely to develop some kind of health problem or face an accident sometime in his or her life. Policy experts and regulators say insurance works best when it spreads the risk across a large group of people. Your house may not burn down this year, but you pay for insurance coverage just in case.
I'm a single man. Why do I have a plan with maternity coverage?
Again, it's about spreading the risk. Men may not need maternity care, but women don't need treatment for prostate cancer and those costs are baked into the rates, too. Older men and women past childbearing age are more likely to need treatment for heart disease, artificial hips or other illnesses that younger men and women are less likely to need. "The whole concept of insurance is you can't just pick and choose the benefits you want," Praeger said. If people — especially older ones — get premiums based solely on what they might need, she said, "it could cost a whole lot more."
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization that isn't affiliated with Kaiser Permanente.