The Obamacare Cancellation Notices You Haven’t Heard About

By Igor Volsky and Adam Peck on November 18, 2013 at 2:44 pm

As lawmakers on both sides of the aisle are endorsing legislation to allow Americans purchasing health care coverage in the individual market to stay in their existing insurance plans, they’re ignoring a far more pressing coverage problem in the 26 states that have yet to expand their Medicaid programs. There, five million working poor Americans could be denied access to affordable insurance altogether.
The stories of private market enrollees being forced to purchase more substantive insurance have animated politics for the last three weeks. But the failure of 25 states to expand Medicaid coverage to 133 percent of the federal poverty line, as envisioned by reform, is actually far more disastrous and undermines the promise of health care for the millions who earn “too much to qualify for Medicaid but not enough to qualify for Marketplace premium tax credits.”
Relying on analysis form the Kaiser Family Foundation, ThinkProgress compared the numbers of lower-income Americans who are denied coverage by GOP-controlled legislatures or governors to the public estimates of residents receiving cancellation notices in those states’ individual markets. Though the public debate has focused on the loss of individual private plans, the working poor are far more likely to go without insurance:

The problem plaguing recipients of cancellation notices is even less severe than the graphic above would suggest. Nationally, approximately 15 million people are purchasing individual plans, but just 5 million remain in those plans for a year or more — the majority switch to more comprehensive insurance.
Some percentage of these five million enrollees will be able to stay in their cancelled policies for longer, as state insurance commissioners and insurers adopt the Obama administration’s new flexibility rule, allowing existing plans to continue offering coverage for at least a year. But even the millions who do have to enroll in new policies in 2014 will do so with the aid of a tax credit and will pay less or a comparable price for more comprehensive coverage. Approximately 48 percent “of people now buying their own insurance would be eligible for a tax credit that would offset their premium,” Kaiser estimates. More than one million “will be eligible for Medicaid starting in 2014.” That leaves 2.1 million to 2.4 million Americans who are too wealthy to qualify for assistance and will have to pay more for insurance under the new system.
Compare that to the 5 million Americans who fall into the coverage gap. They are the working poor cashiers, cooks, nurses’ aides, waiters and waitresses who were intended to benefit the most under reform, yet will continue to struggle to afford coverage as a result of the GOP’s political calculations. “Blacks are disproportionately affected,” the New York Times recently reported, “largely because more of them are poor and living in Southern states. In all, 6 out of 10 blacks live in the states not expanding Medicaid.”
Yet the very same Republican lawmakers and conservative advocacy groups who have seized on the cancellation notices to argue that the law has failed are actively campaigning to prevent states from expanding public health insurance to these people. They claim that expansion would cost states millions, even though the federal government will pick up nearly all of the costs of coverage (100 percent for the first three years, phasing down to 90 percent in 2020 and all subsequent years), paying nearly 93 percent the cost over the next nine years, according to the Congressional Budget Office.