Obamacare's Insurance Cancellations: A Feature, Not a Bug

Millions of Americans were surprised to learn this month that their insurance companies won’t renew their expiring private health plans next year, despite President Obama’s frequent assurances that people who liked their coverage could keep it. What’s mostly been lost in the well-documented outrage over the cancellations is that they’re a feature, not a bug, of the Affordable Care Act. Some policies are being canceled because the law is doing precisely what it was meant to do: create an insurance market where Americans share the cost of getting sick more broadly.

In Obamacare’s central bargain, insurance companies agreed to stop turning people away or charging them more for being sick, in exchange for everyone buying a minimum level of coverage. “Yes, some people will have to pay more, but they were paying an artificially low amount,” says Sabrina Corlette, a researcher at the Georgetown Health Policy Research Institute. “They were benefiting from a system that discriminated against people with preexisting conditions.”