Obama’s promise of coverage continuity has been broken for those who currently buy private plans on the open market, but many may be better off. The individual health insurance plans being cancelled this fall are generally being discontinued because they do not meet new ACA standards for insurance. The law requires that plans cover a package of what the federal government defines as “essential health benefits.” These include basic categories of care, including hospitalization, emergency care, maternity services, mental health services and prescription drugs. The law also limits out-of-pocket spending and bans insurers from setting various annual and lifetime limits on coverage. (To balance the increased cost of covering these services, some insurers have narrowed the provider networks for plans being offered under the ACA.)
These new standards will lead to more comprehensive coverage for many people. Previously, many plans sold on the open market offered coverage so skimpy that it did not protect consumers from financial ruin. More than 60 percent of all personal bankruptcies in the U.S. in 2007 were due to medical bills. Of those who declared bankruptcy due to medical costs, about three-quarters had health insurance.
As the law’s proponents are fond of noting, in many cases, more expensive coverage will actually cost the same or less than less comprehensive plans offered in the past. Those purchasing coverage on their own through the law’s insurance exchanges will be eligible for new federal subsidies if their earn up to 400 percent of the federal poverty level, about $46,000 for an individual and $95,000 for a family of four.