ObamaCare's insurance cancellation problem isn't that big of a problem

Republicans are eager to slam Democrats over the 4.7 million Americans who have lost insurance coverage under ObamaCare. It's not that simple.

Affordable Care Act
(Image credit: (AP Photo/Eric Gay))

ObamaCare is finally here, as the first wave of new insurance policies under the Affordable Care Act kicked in January 1. And according to the White House, more than 2.1 million people have already signed up for private insurance through ObamaCare exchanges.

However, some 4.7 million others have received insurance cancellation notices because their policies did not meet the law's stricter standards, according to the Associated Press. Insurance cancellations have become the GOP's primary talking point of late in criticizing the ACA — Rep. Mike Rogers (R-Mich.) claimed 80 million to 100 million people would lose coverage.

The attack is a strong one, especially in an election year. The optics of lost insurance makes Democrats seems heartless and inept.

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Such attacks also may be more than a little overblown.

Of those 4.7 million people whose insurance was reportedly canceled, only 10,000, or 0.2 percent, will actually wind up with no access to an affordable insurance alternative, according to a report from the Minority Staff of the House Committee on Energy and Commerce. The remaining 99.8 percent can either re-up their existing plans thanks to a last-minute tweak to the ACA, or qualify for subsidized or catastrophic coverage.

Now, this report comes solely from the Democrats on the committee, and they obviously have a big incentive to paint the ACA in as favorable a light as possible. And no matter how you spin what happens next — there's an affordable workaround! — millions of people are nonetheless losing coverage. The report neither disputes nor endorses the 4.7 million figure.

Still, the report's central premise does undercut the argument that millions of people will be left completely out in the cold.

About half of those who were in line to lose their coverage should be able to keep their existing plans under an administrative fix to the health care law. When cancellations became a flashpoint in November, President Obama announced that insurers could extend for one more year plans that were slated for termination.

An additional 1.4 million people should qualify for Medicaid — which greatly expanded under the law — or be able to obtain tax credits to buy cheaper insurance. And almost all of the remaining 950,000 should be able to enroll in low-cost catastrophic coverage as a last resort.

The White House also recently announced that people who lose coverage will not be subject to the individual mandate's penalty this year. While that won't help them get on new plans, it will at least take some of the sting out of losing their old ones.

With the midterm elections looming, Republicans are hoping to pick off some Democratic seats with pointed ObamaCare attacks. The conservative group Americans for Prosperity is already launching a huge ad blitz targeting Democratic senators over cancellations.

It's still way to early to tell how the law is working from a public policy perspective, or whether these political attacks are working as intended. As more enrollment numbers come out over the next few months though, we'll get a better idea of whether cancellations could really be a significant threat to incumbent Democrats come November.

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