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You may remember hearing the horror stories of people who saw their medical coverage revoked once they became seriously ill.
For instance, during congressional testimony in 2009, a nurse from Texas told of losing her coverage after being diagnosed with aggressive breast cancer because she had failed to disclose in her insurance application that she had once visited a dermatologist for acne, the Los Angeles Times reported.
Such stories provide the background for a claim in The Road We’ve Traveled, a 17-minute film from President Barack Obama’s re-election campaign. The film touts Obama’s achievements in health care, saying that the Affordable Care Act has substantially expanded coverage for millions of Americans.
The film claims that as a result of Obama’s policies, "Americans no longer will see their coverage dropped or capped when illness strikes." We decided to check to see whether that was correct.
In the widely publicized (and criticized) practice, health insurers used sometimes innocent or inadvertent mistakes by applicants to retroactively rescind their coverage. Furthering public outrage were revelations that these was not merely rogue practices but, at least at certain companies, pervasive policies. According to congressional testimony, employees were praised in performance reviews for terminating the policies of customers with expensive illnesses, the Los Angeles Times reported.
This issue was confronted head-on in the 2010 health care law passed by the Democratic Congress and signed by Obama, according to a summary of the health care law published by the Kaiser Family Foundation.
The law has already begun to prohibit individual and group health plans from placing "lifetime limits on the dollar value of coverage" and prohibit insurers from "rescinding coverage except in cases of fraud." Beginning in January 2014, the law is scheduled to prohibit individual and group health plans from placing annual limits on the dollar value of coverage. (Prior to that date, plans may impose annual limits on coverage only according to limits set by the Secretary of Health and Human Services.)
Whereas the old practices allowed companies to comb policies for inadvertent omissions and minor breaches of the fine print, the new law sets a higher threshold -- fraud -- that would be harder, though not impossible, for companies to prove.
On the surface, then, the ad would appear to be accurate. However, we think there’s a bit of context that’s worth noting.
The law doesn’t explicitly stop companies from imposing limits on the number of visits to doctors, physical therapists and the like. This may be dealt with once an "essential health benefits package" is created by 2014 -- a package that would serve as the minimum list of services available with plans purchased on the health care "exchanges" that are to be set up by the health care law.
But since the elements of this package have not yet been determined, we don't know whether the package will ultimately include a ban on limiting physician visits. This lack of certainty weakens the film’s claim that Americans will "no longer will see their coverage … capped when illness strikes."
Second, it’s worth noting that the number of people who experienced revocations of their insurance was quite small. Typically this only happened to people with individually purchased insurance policies, and even within that group, the rates were small.
We looked at the study that served as the statistical basis for the congressional hearings we cited earlier. It was produced by the National Association of Insurance Commissioners, the group of state-based officials who regulate insurance.
The group found that in the five-year period from 2004 to 2008, the annual number of rescinded policies averaged 5,449 per year, ranging from a high of 7,004 in 2005 to a low of 4,818 in 2007.
To put this in perspective, 28.5 million people in 2008 had individually purchased insurance -- the only kind for which people had to worry about getting their insurance revoked -- while 202.6 million had private insurance of any type, according to the Census Bureau. So, fewer than two of every 10,000 people who held individually purchased policies in 2008 saw their insurance revoked that year, or about two of every 100,000 people who had private insurance of any kind.
The film is largely accurate that Obama’s health care law makes it all but impossible for health insurers to revoke their beneficiaries’ policies for anything short of willful fraudulence. But the law hasn’t yet entirely closed the door on limiting beneficiaries medical services. And it’s worth noting that, their media profile notwithstanding, there weren’t a large number of people who experienced revocations every year. Their number was far smaller than, say, those hurt by pre-existing condition rules, or those left uninsured after graduating from college -- the other two claims the film makes about Obama’s health care law. On balance, we rate the statement Mostly True.
Barack Obama for President, "The Road We’ve Traveled," Mar. 16, 2012
National Association of Insurance Commissioners, "Rescission Data Call of the NAIC Regulatory Framework (B) Task Force," Dec. 17, 2009
Census Bureau, "Income, Poverty, and Health Insurance Coverage in the United States: 2010" (Table C-3. Health Insurance Coverage by Age: 1999 to 2010), released September 2011
FamilesUSA, "Post-Claims Underwriting Survey," June 2008
Kaiser Family Foundation, Summary of New Health Reform Law, accessed Mar. 16, 2012
Los Angeles Times, "Blue Cross praised employees who dropped sick policyholders, lawmaker says," June 17, 2009
Email interview with Scott Holeman, spokesman for the National Association of Insurance Commissioners, Mar. 19, 2012
Email interview with Wendell Potter, former health insurance industry executive and author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans," Mar. 19, 2012
Email interview with Henry Aaron, senior fellow at the Brookings Institution, Mar. 19, 2012
Email interview with Jonathan Oberlander, health policy professor at the University of North Carolina School of Medicine, Mar. 19, 2012
Email interview with Timothy S. Jost, law professor at Washington and Lee University School of Law, Mar. 19, 2012
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