To address the outrage over these cancellations, the Obama administration on Thursday outlined a new policy to allow insurers to extend current health plans into 2015.
Here are answers to some key questions:
Why are the cancellation notices being sent?
The Affordable Care Act requires health insurance policies that begin after Jan. 1, 2014, to offer new consumer protections.
Among other things, these protections prohibit insurers from turning down sick customers and require all health plans to offer a basic set of benefits, including
Many health plans that were on the market did not offer these protections.
How many people had these kinds of health plans?
It is difficult to say. Approximately 15 million people have a health insurance plan that they or their family bought on the open market. (Most Americans get health insurance either through an employer or through a government program, such as Medicare or Medicaid).
But not all consumers on the so-called individual market received cancellation notices.
Why didn't all consumers with these plans receive cancellations?
Health insurers in most states have until Dec. 31 to renew health plans. If a plan is renewed before Dec. 31, it does not have to include the new protections in the health law.
Some insurance companies canceled policies up for renewal at the end of the year. But others opted to renew them early. That allowed consumers to remain on their current plan for another year, or until the end of 2014.
What does the new Obama administration plan do?
The plan would allow some consumers to remain on their current health plan even longer.
Instead of having to renew their current plan by Dec. 31, consumers would now have until Oct. 1, 2014. Since health plans typically last a year, that means a consumer could stay on a health plan without the new protections until Sept. 30, 2015.
Would all consumers whose policies were canceled be able to do this?
Insurance companies that have sent cancellation notices would have to offer those consumers the option to renew. Many insurers are reluctant to do this because they have already created new plans for next year.
State insurance regulators would also have to sign off. That, too, could be very complicated. Many states have enacted laws that require all health insurance policies to meet the standards in the Affordable Care Act starting Jan. 1.
Obama administration officials said states can choose whether to allow current health plans to be extended. And it's up to the insurance companies whether they want to renew the policies.
Would consumers who have received cancellation notices be better off buying insurance through the new Obamacare online marketplaces?
Some consumers would probably benefit from the law's new protections. Some also probably will end up paying less, thanks to government subsidies.
But others would have to pay more for a health plan offered in the new marketplaces. Or they may have to select a plan with a network that does not include as many doctors or hospitals.
So, what effect will the administration's announcement have?
If many insurers are allowed by state regulators to renew existing policies and choose to do so, then fewer healthy Americans may join the new marketplaces created by the Affordable Care Act.
That could destabilize these marketplaces, which rely on healthy customers to keep insurance premiums in check. If there are not enough healthy consumers enrolled, premiums could soar in 2015.
Administration officials say they are confident that eventually more consumers will move into the marketplaces because the marketplaces will offer superior health coverage and because many consumers will qualify for government subsidies. These subsidies will not be available to people who renew their current plans.
But insurers and state regulators, concerned about destabilizing the marketplaces, are resistant to renewing canceled policies. In the end, very few of the consumers whose policies were canceled may actually be offered the opportunity to renew.