With just a handful still working out the details, most states have decided to allow health insurance providers to renew policies that don't meet the new standards required by the Affordable Care Act.
That means many people will get to keep their old plans if they want them. But many of those facing cancellation likely will be better off without them, according to Families USA, a consumer group that has advocated for the new law.
While there are no hard numbers on how many people face cancellation, many will come out ahead under the new law. That's because roughly three-quarters of policyholders facing cancellations have incomes low enough to qualify them for either expanded Medicaid coverage or premium subsides under the new law.
"They are likely to be considerably better off under the Affordable Care Act because today there are no such subsidies," said Ron Pollack, executive director of Families USA.
Faced with widespread criticism that millions of Americans faced cancellation of their health-care plans by the end of the year, the Obama administration reversed course last month and gave state insurance departments the option of letting carriers renew policies that don't comply with the ACA.
The 11th-hour reversal further complicated the already rocky rollout of a law designed to provide wider health coverage to millions of uninsured households.
The change also sent 50 state insurance commissioners — who regulate health-care coverage — back to the drawing board.
Of those that have completed their reviews this week, some 34 states have said insurance carriers can renew policies even if they don't meet the Affordable Care Act guidelines. The final decision is up to the insurance carriers, which can renew policies for only one more year.
Many of the roughly 15 million people covered in the so-called individual insurance market have been able to renew their policies all along. Those with plans meeting the coverage level called for under the Affordable Care Act were not subject to cancellation. Policies that had been "grandfathered" under the law — generally meaning those whose terms have not changed in the past three years — were also safe from cancellation.
A large number with policies that didn't meet the ACA's coverage levels had already renewed under so-called early renewal rules, which allowed policyholders to sign up for another 12 months as long as they did it before the new standards become effective Dec. 31.
That's one reason cancellation rates have been relatively low in states with early renewal.
Iowa Insurance Commissioner Nick Gerhart said last month that most carriers selling individual coverage have allowed policyholders to renew. He estimated that only about 1,000 Iowans will see policies canceled at the end of this year.
Eleven states have banned policy renewals — all but two of which are running their own exchanges. That may be because states that have invested the time and money to set up exchanges in support of the ACA are eager to drive customers to their marketplaces. In their refusal to allow renewals, many have also cited the new law's original ban on plans that don't provide minimum coverage levels.
"In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course," said Washington State Insurance Commissioner Mike Kreidler, adding that the decision was "in the best interest of the health insurance market in Washington."
Some states cite existing state laws prohibiting renewals, while others have used the occasion to take a swipe at the Affordable Care Act and the Obama administration's handling of the rollout.
Allowing renewals "would seriously destabilize Indiana's insurance market and create logistical chaos, fueling even more uncertainty for Hoosiers," said Indiana Department of Insurance Commissioner Stephen W. Robertson. "Furthermore, we do not believe that [the insurance commission] has the authority under Indiana law to fulfill the president's untimely request."
Some states have used the review of the rules on renewing policies to remind consumers they may be better off buying insurance through the exchanges. Consumers who may be eligible for tax credits and premium subsidies under the new law won't be able to collect them if they renew an existing policy that doesn't meet the new coverage standards.
The insurance commission in Maryland has told insurers renewing policies to inform customers that they may be better off with a new plan and that their renewed plan may be subject to higher premiums.
Despite the new allowances for policy renewals, the last-minute change in the rules means some policyholders may be left high and dry without coverage. Others may be denied renewals by their carriers and forced to buy policies offering higher levels of coverage.
"Those people who don't get subsidized — who may be paying higher premiums for a better plan — may not be happy about that," Pollack said. "But the portion of the population that's potentially worse off is exceedingly small.
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First published December 4 2013, 1:56 PM