Fact-Check: Changes & Improvements in the Individual Market Under the Affordable Care Act

Update: Also read President Obama's remarks on this issue below.

There has been a lot of media attention, and some misleading attacks from critics, about some recent notices from insurance companies about changes in some people’s insurance plans.

Press Secretary Jay Carney took this question head-on yesterday. He made some key points:

1. More than three out of every four Americans gets insurance from their employer, Medicare, Medicaid and the Veterans Administration. These notices have been sent only to some of the 5% of Americans who get insurance on the individual insurance market.
2. Americans who are currently on the individual market stand to benefit the most from the Affordable Care Act. Even those receiving notices of “cancellation” will be able to enroll in a new plan that does not discriminate based on pre-existing conditions, does not deny them key benefits like maternity, mental health, or prescription drug coverage, and cannot drop you when you’re sick.
3. Americans in the individual market who have a plan that hasn’t been changed by their insurance company (an all-too-familiar occurrence for many) can keep their plan if they choose, even though a plan with better benefits is likely available. 

Watch his response to the question below, or read the transcript below the fold:

Update: President Obama also addressed this issue at length during his remarks on the Affordable Care Act in Boston, Massachusetts today. Massachusetts’s 2006 bipartisan health care law served as a model in drafting the Affordable Care Act, and the state’s experience during its first year of enrollment offers important lessons for what we can expect over the next six months.  Here's what the President said about the insurance company notices:

And since we all benefit, there are parts of this law that also require everybody to contribute, that require everybody to take some measure of responsibility.  So, to help pay for the law, the wealthiest Americans –- families who make more than $250,000 a year –- they've got to pay a little bit more.  The most expensive employer health insurance plans no longer qualify for unlimited tax breaks.  Some folks aren't happy about that, but it's the right thing to do. 

Just like in Massachusetts, most people who can afford health insurance have to take responsibility to buy health insurance, or pay a penalty.  And employers with more than 50 employees are required to either provide health insurance to their workers or pay a penalty -- again, because they shouldn’t just dump off those costs onto the rest of us.  Everybody has got some responsibilities.   

Now, it is also true that some Americans who have health insurance plans that they bought on their own through the old individual market are getting notices from their insurance companies suggesting that somehow, because of the Affordable Care Act, they may be losing their existing health insurance plan.  This has been the latest flurry in the news.  Because there's been a lot of confusion and misinformation about this, I want to explain just what's going on. 

One of the things health reform was designed to do was to help not only the uninsured, but also the underinsured.  And there are a number of Americans –- fewer than 5 percent of Americans -– who've got cut-rate plans that don’t offer real financial protection in the event of a serious illness or an accident.  Remember, before the Affordable Care Act, these bad-apple insurers had free rein every single year to limit the care that you received, or use minor preexisting conditions to jack up your premiums or bill you into bankruptcy.  So a lot of people thought they were buying coverage, and it turned out not to be so good. 

Before the Affordable Care Act, the worst of these plans routinely dropped thousands of Americans every single year.  And on average, premiums for folks who stayed in their plans for more than a year shot up about 15 percent a year.  This wasn’t just bad for those folks who had these policies, it was bad for all of us -- because, again, when tragedy strikes and folks can’t pay their medical bills, everybody else picks up the tab. 

Now, if you had one of these substandard plans before the Affordable Care Act became law and you really liked that plan, you’re able to keep it.  That’s what I said when I was running for office.  That was part of the promise we made.  But ever since the law was passed, if insurers decided to downgrade or cancel these substandard plans, what we said under the law is you've got to replace them with quality, comprehensive coverage  -- because that, too, was a central premise of the Affordable Care Act from the very beginning.

And today, that promise means that every plan in the marketplace covers a core set of minimum benefits, like maternity care, and preventive care, and mental health care, and prescription drug benefits, and hospitalization.  And they can’t use allergies or pregnancy or a sports injury or the fact that you're a woman to charge you more.  They can't do that anymore.   They can't do that anymore. 

If you couldn’t afford coverage because your child had asthma, well, he’s now covered.  If you’re one of the 45 million Americans with a mental illness, you’re now covered.  If you’re a young couple expecting a baby, you’re covered.  You’re safer.  The system is more secure for you and it’s more secure for everybody. 

So if you’re getting one of these letters, just shop around in the new marketplace.  That’s what it’s for... Because of the tax credits that we’re offering and the competition between insurers, most people are going to be able to get better, comprehensive health care plans for the same price or even cheaper than projected.  You’re going to get a better deal.

Now, there’s a fraction of Americans with higher incomes who will pay more on the front end for better insurance with better benefits and protections like the Patient’s Bill of Rights.  And that will actually save them from financial ruin if they get sick.  But nobody is losing their right to health care coverage. And no insurance company will ever be able to deny you coverage, or drop you as a customer altogether.  Those days are over.  And that’s the truth.  That is the truth.  

So for people without health insurance, they’re finally going to be able to get it.  For the vast majority of people who have health insurance that works, you can keep it.  For the fewer than 5 percent of Americans who buy insurance on your own, you will be getting a better deal.

So anyone peddling the notion that insurers are cancelling people’s plan without mentioning that almost all the insurers are encouraging people to join better plans with the same carrier, and stronger benefits and stronger protections, while others will be able to get better plans with new carriers through the marketplace, and that many will get new help to pay for these better plans and make them actually cheaper -- if you leave that stuff out, you’re being grossly misleading, to say the least. 

But, frankly, look, you saw this in Massachusetts -- this is one of the challenges of health care form.  Health care is complicated and it’s very personal, and it’s easy to scare folks. And it’s no surprise that some of the same folks trying to scare people now are the same folks who’ve been trying to sink the Affordable Care Act from the beginning.  And frankly, I don’t understand it.  Providing people with health care, that should be a no-brainer.  Giving people a chance to get health care should be a no-brainer. 

And I’ve said before, if folks had actually good ideas, better ideas than what’s happening in Massachusetts or what we’ve proposed for providing people with health insurance, I’d be happy to listen.  But that’s not what’s happening.  And anyone defending the remnants of the old, broken system as if it was working for people, anybody who thinks we shouldn’t finish the job of making the health care system work for everybody -– especially when these folks offer no plan for the uninsured or the underinsured, or folks who lose their insurance each year -- those folks should have to explain themselves. 

Because I don’t think we should go back to discriminating against kids with preexisting conditions.  I don’t think we should go back to dropping coverage for people when they get sick, or because they make a mistake on their application.  I don’t think we should go back to the daily cruelties and indignities and constant insecurity of a broken health care system.  And I’m confident most Americans agree with me.

So, yes, this is hard, because the health care system is a big system, and it’s complicated.  And if it was hard doing it just in one state, it's harder to do it in all 50 states -- especially when the governors of a bunch of states and half of the Congress aren't trying to help.  Yes, it's hard.  But it's worth it.  It is the right thing to do, and we're going to keep moving forward. We are going to keep working to improve the law, just like you did here in Massachusetts.