Some time ago, when President Obama was trying to get support for his health care reform plan, he said “If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.” Since then, the ACA has lead to the cancellation of plans used by millions of people, and everyone in the industry knew this was going to happen. Supporters of the President and the PPACA seem to know that this looks rather bad, so they’ve tried to defending it by saying things like this: “[Obama’s] defense was that companies drop people every year; that the cancelled plans were shabby; and that, once people saw the great deals on healthcare.gov, they wouldn’t want their old ones anyway. That just seemed to make people angrier, though he was no doubt right about the plans.” [Emphasis mine.] So that’s the new line from Democrats: You can’t keep your health care plan, even if you like it, because it’s shabby. There is “no doubt” about this shabbiness.
In fact, I haven’t seen any of the laws defenders present evidence that the plans that got cancelled were shabby. Reading this, or this, or this suggests that some people out there liked their plans until they were cancelled, and don’t like the alternatives being offered on the exchanges very much.
Okay, so some people say that Obama cancelled only “shabby” plans while others say that Obama cancelled good plans that they would have liked to keep. So who’s telling the truth? I’ve found no defender of the law who’s willing to tell as basic truth: some plans were cancelled not because they offered too little coverage, but rather because they offered too much coverage. As the non-partisan site RealClearPolitics explains:
Imagine a school where 59, 71, 82, and 90 are passing grades-but 66, 73, 85, and 98 are failing (subpar) grades. Ponder that for a moment, and ask yourself whether you can discern any logic. No? Welcome to the ACA School.
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By now, many are familiar with a few of the ACA’s “subpar” definitions. In the individual and small-group markets, for example, every ACA-compliant plan must cover officially defined essential health benefits or be deemed subpar: A 62-year-old woman’s plan must cover prostate screenings; her son’s plan must cover pap smears; and an elderly nun must be insured against pregnancy costs. But the ACA’s mystery grading system is even more surreal.
It is in the realm of actuarial value (AV) requirements where the law demands pointless standardization. AV measures the extent to which a policy covers the average enrollee’s medical expenses. On average, for example, a plan with an AV of 63 percent covers 63 percent of enrollees’ medical costs.
All ACA-compliant plans must fit within four “metallic” bands. A platinum plan covers around 90 percent of an enrollee’s costs, with a 2 percent tolerance in either direction. Thus, a platinum plan covers between 88 and 92 percent of costs. A less expensive gold plan covers between 78 and 82 percent of expenses. A silver plan’s AV falls between 68 and 72 percent. Finally, bronze plans cover between 58 and 62 percent.
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One of us (Pat) works with a small employer whose insurance policy has a 96.9 percent AV. The employer pays 100 percent of the employees’ premiums. The ACA views this plan as subpar because it pays too high a percentage of the employees’ medical costs. To be ACA-compliant, this group will must now provide fewer benefits. When employees get sick, the ACA insists that they face higher out-of-pocket costs.
Think of Pat’s client as the student with the highest GPA in the class. Typically, this student would be valedictorian. At the ACA School, however, the art teacher/principal says sternly, “I’m deeply disappointed in your performance. Unless you want an F this semester, you had better answer more questions incorrectly and miss some deadlines. Consider this a warning.”
So, far from canceling only shabby plans, Obama & co. cancelled some plans because they were too good and covered too much. This law is called the Patient Protection and Affordable Care Act. More and more, that title is seeming less like a joke and more like a series of jokes. Every word is a separate joke, kind of like Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan. What justification is there for outlawing the plans that offer the most thorough coverage and forcing people to buy plans that have less thorough coverage?