Affordable Care Act, Not Insurers, At Fault For Cancelled Insurance Plans

Matthew Needham

11/4/2013 12:01:00 AM - Matthew Needham

President Obama has come under fire recently for promises about the Affordable Care Act. The President repeatedly assured doubters that under the Affordable Care Act, Americans would be able to keep their existing health insurance. As a growing number of Americans receive cancellation notices from their insurance companies, many are describing this promise as misleading, if not an outright lie. These cancellation notices are particularly infuriating to young people, who are now forced to subsidize the health care of older, more affluent Americans.

In a speech defending the law on Wednesday, the President attempted to shift the blame for these cancellations on “bad apple insurers.” This claim ignores the fact that these cancellation notices are the result of insurance companies simply complying with the Affordable Care Act. The Obama administration is depending on “young invincibles” to enroll in health insurance plans to make the law a success, but young people would be wise to consider the misleading nature of the administration’s claims.

During Congress’ debate of the Affordable Care Act and the resulting political aftermath, one of President Obama’s most persistent claims was that people who were happy with their health insurance would be able to keep it. In an address to the American Medical Association on June 15, 2009, the President stated, “If you like your health care plan, you will be able to keep your health care plan. Period.” The President planted this straightforward stake in the ground, with no caveats.

As the law has gradually taken effect, this has proven untrue. According to CBS News, more than 2 million Americans are losing their health insurance plans because of the Affordable Care Act.

While the Obama administration has admitted these insurance cancellations are taking place, the administration has attempted to shift the blame away from the Affordable Care Act. In a press conference on Tuesday, Press Secretary Jay Carney stated to those receiving health insurance cancellation notices, “Your insurer basically threw you off that plan.” On Wednesday, the President himself attributed these changes to “bad apple insurers” who are attempting to “downgrade or cancel these substandard plans.”

In reality, these insurance cancellations are the result of insurance companies simply complying with the regulations put in place by the Affordable Care Act. According to Peter Suderman, Senior Editor of Reason Magazine, the Affordable Care Act “institute[s] a slew of new requirements that [are] certain to result in health insurers dropping current plans for millions of people.” Many existing plans in the individual market, which were targeted to meet consumer demand, did not fit these mandates. Health insurance companies have had to cancel many of their existing plans to create new, more costly plans which do comply with these new mandates.

While this may be news to those who followed President Obama’s rhetoric over the past few years, the large number of health insurance cancellations were actually expected by the Obama administration. NBC News recently took a look at regulations issued in July 2010, finding that the Obama 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.”

The success of the Affordable Care Act rests upon a large number of so-called “young invincibles” enrolling in health care. In order to make the law work, “The White House has said it needs 2.7 million young adults to buy insurance through the government-run marketplaces,” according to Businessweek. But as Cathy Reisenwitz recently noted on Forbes, the law “hoses young, relatively poor people like [her] right when we least need high bills for services they’re not using.” In the face of mounting evidence that President Obama’s claims about the Affordable Care Act were misleading, young people are wise to remain skeptical of the law’s supposed benefits.