Senior Policy Analyst
The fact that insurance companies are discontinuing some plans they offer in the individual market is getting a lot of attention. Unfortunately, some media reports have confused the issue and blown it out of proportion. Here are five things to keep in mind:
Here’s the background. To minimize disruptions in the insurance market, health reform allowed insurers to continue to offer plans that existed when the law was enacted in March 2010 even if these plans didn’t meet certain health reform rules, such as covering certain preventive services at no cost to enrollees. But if insurers changed a “grandfathered” plan significantly, it would lose grandfathered status and would have to meet any applicable health reform standards. This makes sense, since it would no longer be the same plan that pre-dated health reform.
No one expected many of these grandfathered plans to stick around for very long. Insurers in the individual market can’t sell them to new enrollees, and as was widely reported in 2010 —including by us — the federal government estimated that 40-67 percent of individual market policies (and about half of all employer plans) could lose grandfathered status by 2013. Also, turnover is high in the individual market, so many people who initially benefitted from grandfathering have switched to something else. We don’t know how many of the people affected by plan discontinuations are in grandfathered plans, but this suggests that many of them aren’t.