Fewer than 500,000 people who had their individual insurance policies cancelled will be without coverage on January 1, the Obama administration estimated Thursday.
That’s far less than the millions of people that health law critics said would lack insurance after their old policies were terminated because they didn’t meet new minimal standards under the Affordable Care Act.
Republican lawmakers and conservative groups had maintained that anywhere from four to 14 million people might be without coverage because of the cancellations and difficulty enrolling in new coverage due to technical problems on HealthCare.gov.
But senior White House officials on Thursday said those estimates were vastly overstated. Insurers are instead auto-enrolling most customers who received cancellation letters into new plans.
The cancelled policies created a political firestorm in November for President Obama who had repeatedly said the health care law allowed Americans to keep their coverage if they liked it.
Once millions of policy cancellation letters went out, public outrage mounted against the president, causing him to let people extend their old policies for another year if their insurers and state regulators would allow it.
On Thursday, the Obama administration offered another olive branch to people who received policy cancellations – a hardship exemption that allows them to enroll in catastrophic coverage if marketplace plans in their area are more expensive than their old cancelled policies.
Catastrophic plans typically have lower premiums than a comprehensive plan, but individuals are usually responsible for initial medical costs – often up to $6,000 – before coverage kicks in.
People with policy cancellations who want catastrophic coverage must complete a hardship exemption form and submit it to the insurer offering catastrophic coverage along with documentation showing that their previous policy was cancelled.
The insurer will then forward that information to the Department of Health and Human Services to verify eligibility for the exemption.
The hardship proposal, announced Thursday evening by HHS, got a thumbs down from Karen Ignani, President and CEO of America’s Health Insurance Plans, the trade group representing the health insurance industry.
“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” Ignani said in a statement Thursday night.