Policy cancellations a new blow


WASHINGTON — Move over, website woes. Lawmakers confronted the Obama administration Tuesday with a difficult new health care problem — a wave of cancellation notices hitting small businesses and individuals who buy their own insurance.

At the same time, the federal official closest to the website apologized for its dysfunction in new sign-ups and asserted things are getting better by the day.

Medicare chief Marilyn Tavenner said it’s not the administration but insurers who are responsible for cancellation letters now reaching many of the estimated 14 million people who buy individual policies. And, officials said, people who get cancellation notices will be able to find better replacement plans, in some cases for less.

The Associated Press, citing the National Association of Insurance Commissioners, reported in May that many carriers would opt to cancel policies this fall and issue new ones. Administratively that was seen as easier than changing existing plans to comply with the new law, which mandates coverage of more services and provides better financial protection against catastrophic illnesses.

While the administration had ample warning of the cancellations, they could become another public relations debacle for President Barack Obama’s signature legislation. This problem goes to the credibility of one of the president’s earliest promises about the health care overhaul: You can keep your plan if you like it.

In the spring, state insurance commissioners started giving insurers the option of canceling existing individual plans for 2014, since the coverage required under Obama’s law is more robust. Some states directed insurers to issue cancellations. Large employer plans that cover most workers and their families are unlikely to be affected.

The cancellation notices are now reaching policyholders, and they’ve been complaining to their lawmakers — who were grilling Tavenner on Tuesday.

“Based on what little information the administration has disclosed, it turns out that more people have received cancellation notices for their health care plans this month than have enrolled in the (health care website),” said Ways and Means Chairman Dave Camp, R-Mich. He cited a news report of 146,000 cancellations in his state alone.

Up and down the dais, lawmakers chimed in with stories of constituents who had received similar notices. Republicans offered examples of people being asked to pay more.

Democrats countered by citing constituents who had been able to find lower-cost coverage than they have now. Ranking Democrat Sander Levin of Michigan said one of his constituents has been paying $800 a month for a BlueCrossBlueShield plan and managed to find comparable coverage for $77, after tax credits that lower the premiums.

Still, Levin added, “this has become a matter of legitimate discussion.”

It could take months to sort out the balance of individual winners and losers. There’s not a central source of statistics on how many people have gotten cancellations. Even the number of people who buy insurance individually is disputed.

It isn’t the administration’s fault, said Tavenner. “In fact the issuer has decided to change the plan; (they) didn’t have to.”