# Why did Democrats choose to outlaw the best insurance plans? **URL:** \ **Category:** Great Debates\ **Created:** [December 16, 2013, 10:20pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507 "2013-12-16T22:20:28Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [December 17, 2013, 7:47pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/41 "2013-12-17T19:47:58Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Reviewing the text of the ACA, it’s quite clear that upper limits on actuarial values only apply to plans offered subject to the subsidies for those making 100-400% of the poverty line. It was my impression that the subsidies can be used to purchase any plan that is offered on the exchanges. Also, the rules determining which previously existing plans got “grandfathered” were not in the legislation itself, but determined by HHS bureaucrats after it was passed. Nothing in the paragraphs you posted from the law seems to say anything, one way or the other, about whether old plans with AVs outside the “metal bands” can continue on the exchanges. In any case, even if I’m interpreting this incorrectly and olds plans with any AV can be included, it would still be pretty ridiculous to not allow new plans with AVs above 93%. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [December 17, 2013, 7:56pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/42 "2013-12-17T19:56:52Z")
> [@ITR\_champion](#): > > It was my impression that the subsidies can be used to purchase any plan that is offered on the exchanges. Also, the rules determining which previously existing plans got “grandfathered” were not in the legislation itself, but determined by HHS bureaucrats after it was passed. Nothing in the paragraphs you posted from the law seems to say anything, one way or the other, about whether old plans with AVs outside the “metal bands” can continue on the exchanges. > > In any case, even if I’m interpreting this incorrectly and olds plans with any AV can be included, it would still be pretty ridiculous to not allow new plans with AVs above 93%. Yes, that would be pretty stupid. And, I can’t find any reputable source that says that plans above that are not allowed. All the sources I found had the 60/70/80/90 thresholds as minimum levels in order to be called bronze/silver/gold/platinum. ---
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [December 17, 2013, 8:42pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/43 "2013-12-17T20:42:40Z")
> [@RitterSport](#): > > And, I can’t find any reputable source that says that plans above that are not allowed. All the sources I found had the 60/70/80/90 thresholds as minimum levels in order to be called bronze/silver/gold/platinum. And I have already linked to four sources that explain that “a gold plan could have an actuarial value of 78% to 82%”, and likewise the other metal bands can have an AV of + or - 2% away from the numbers you’ve stated. **Richard Parker** says that I’m interpreting this too literally, and perhaps he’s right. I’m open to looking at any source that proves the point. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 17, 2013, 8:49pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/44 "2013-12-17T20:49:41Z")
I’m as surprised as the next guy, but the OP appears to be correct. From [DEPARTMENT OF HEALTH AND HUMAN SERVICES Patient Protection and Affordable Care Act; Actuarial Value Calculator Methodology](http://www.cms.gov/CCIIO/Resources/Files/Downloads/av-calculator-methodology.pdf) > [@](#): > > The statute groups health plans into four tiers: bronze, with an AV of 60 percent; silver, with an AV of 70 percent; gold, with an AV of 80 percent; and platinum, with an AV of 90 percent. The final rule establishes that a de minimis variation of +/- 2 percentage points of AV is allowed for each tier. And from page 20: > [@](#): > > In the final step, the calculator computes the final actuarial value amount, classifies the plan by metal tier, and determines whether the metal tier matches the desired metal tier input by the user. > > To compute the actuarial value, the calculator divides the numerator by the denominator. Under this proposal, if the actuarial value is outside of these ranges, the calculator outputs the actuarial value and the message “Error: Result is outside of +/-2 percent de minimis variation”. I don’t think there’s any room for the alternative explanation when the language is that of an actuarial calculator methodology description. I would guess the idea was to better enable comparison shopping, by having all bronze plans be roughly similar, and so on for the other tiers. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [December 17, 2013, 9:04pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/45 "2013-12-17T21:04:48Z")
> [@Fotheringay-Phipps](#): > > I’m as surprised as the next guy, but the OP appears to be correct. > > From [DEPARTMENT OF HEALTH AND HUMAN SERVICES Patient Protection and Affordable Care Act; Actuarial Value Calculator Methodology](http://www.cms.gov/CCIIO/Resources/Files/Downloads/av-calculator-methodology.pdf)And from page 20:I don’t think there’s any room for the alternative explanation when the language is that of an actuarial calculator methodology description. > > I would guess the idea was to better enable comparison shopping, by having all bronze plans be roughly similar, and so on for the other tiers. That just means the calculator is poorly programmed, not that policies that fall outside of the +/-2% range are prohibited. From your own cite: > [@](#): > > If the plan does not match the desired > metal tier, the calculator provides the user the option to reset the “Desired Metal Tier” parameter > to the observed metal tier and rerun the actuarial value calculation. If the user declines, the > calculator outputs the actuarial value, the metal tier, and the message, “Calculation resolved > without matching metal tiers.” Agreed? ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [December 17, 2013, 9:05pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/46 "2013-12-17T21:05:04Z")
> [@ITR\_champion](#): > > It was my impression that the subsidies can be used to purchase any plan that is offered on the exchanges. No. Subsidy-eligible plans have lower out-of-pocket maximums which are offset by “credits” against the normal AV calculation. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 17, 2013, 9:11pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/47 "2013-12-17T21:11:00Z")
> [@RitterSport](#): > > That just means the calculator is poorly programmed, not that policies that fall outside of the +/-2% range are prohibited. WADR this seems silly. It’s unlikely on the face of it that the calculator would be designed to reject acceptable plans, but that’s even if you had genuine evidence that these plans were actually acceptable. If you’re just engaging in speculation that the legal guidance is all poorly worded and now that the calculator is also poorly programmed in exactly the same manner, then it’s completely ridiculous > [@](#): > > Agreed? No I don’t agree. It does not seem like you understood the text that you are quoting, but I’d rather not speculate about what you might be thinking. If you can be a bit more specific I’ll address it. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [December 17, 2013, 9:18pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/48 "2013-12-17T21:18:37Z")
> [@Fotheringay-Phipps](#): > > WADR this seems silly. > > It’s unlikely on the face of it that the calculator would be designed to reject acceptable plans, but that’s even if you had genuine evidence that these plans were actually acceptable. If you’re just engaging in speculation that the legal guidance is all poorly worded and now that the calculator is also poorly programmed in exactly the same manner, then it’s completely ridiculous > > No I don’t agree. > > It does not seem like you understood the text that you are quoting, but I’d rather not speculate about what you might be thinking. If you can be a bit more specific I’ll address it. Here: [http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/H/PDF%20HealthReformTranslationActuarialValue.pdf](http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/H/PDF%20HealthReformTranslationActuarialValue.pdf) (warning: PDF) It’s from the California Healthcare Foundation and it says: > [@](#): > > Platinum: AV of 90% or more > Gold: AV of 80% to 90% > Silver: AV of 70% to 80% > Bronze: AV of 60% to 70% The reading that the AV has to be between 78-82% to be Gold, and 84% would be illegal is ludicrous. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 17, 2013, 9:25pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/49 "2013-12-17T21:25:25Z")
Well that cite clearly says what you claim. But it appears that that source is wrong about this issue. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 17, 2013, 9:38pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/50 "2013-12-17T21:38:51Z")
On looking around some more, it’s pretty clear that this is correct and widely accepted. For example: > [@](#): > > Plans cannot exist between the levels. For example, a plan with an AV of 86% will not be considered a qualified health plan. Source: [http://www.msmsinsurance.org/documents/ICC\_Health\_Plans\_Must\_Meet\_Metal\_Levels\_in\_Insurance\_Marketplace.pdf](http://www.msmsinsurance.org/documents/ICC_Health_Plans_Must_Meet_Metal_Levels_in_Insurance_Marketplace.pdf) > [@](#): > > HHS is charged with developing guidelines to provide for a de minimis variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates. HHS proposed allowing for an actuarial value de minimis variation of 2%. For example, a gold plan [80% actuarial value] could have an actuarial value of 78% to 82%. [http://www.bcbsm.com/content/microsites/health-care-reform/en/reform-alerts/actuarial-value-defined.html](http://www.bcbsm.com/content/microsites/health-care-reform/en/reform-alerts/actuarial-value-defined.html) > [@](#): > > Plans within a metal tier have the same actuarial value, meaning they have approximately the same level of benefit generosity. > **[Actuarial\_value\_basics\_for\_NAIC\_040113.pdf](https://www.actuary.org/sites/default/files/files/Actuarial_value_basics_for_NAIC_040113.pdf)** > > 139.90 KB IMO there is no legitimate uncertainty at this point. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [December 17, 2013, 9:54pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/51 "2013-12-17T21:54:28Z")
Having now read the statute and the regulation, I think it’s left pretty ambiguous. I understand the textual argument from “+/-” (which comes solely from the reg, not the statute AFAICT), but no one anywhere has suggested this was an intended result of the law, or can point to the statutory authority requiring it. So I wouldn’t hang my hat on the “+.” Beyond that, the people in the community interpreting the reg don’t really have anything more to add to the discussion. Some of them think 85 AV can’t be sold (to individuals and small groups), some disagree. Probably a court will decide. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 17, 2013, 10:27pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/52 "2013-12-17T22:27:33Z")
> [@Richard\_Parker](#): > > I understand the textual argument from “+/-” (which comes solely from the reg, not the statute AFAICT), but no one anywhere has suggested this was an intended result of the law, or can point to the statutory authority requiring it. So I wouldn’t hang my hat on the “+.” I’ve not read the statute but the impression I get from the regulation is the opposite. Meaning that it gives the impression that the statute as literally written would require exactly 60%, 70% and so on, and the regulation was giving the 2% latitude by declaring it diminimus (and thus in line with the law). What you’re suggesting is that the statute as written would allow a broader band and the regulation was tightening it. This does not seem to be the way the regulators understood it or understood what they were doing, though again I myself have not read it. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [December 17, 2013, 10:40pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/53 "2013-12-17T22:40:13Z")
The statute says “A plan in the platinum level shall provide a level of coverage that is designed to provide benefits that are actuarially equivalent to 90 percent of the full actuarial value of the benefits provided under the plan.” PPACA, 1302(d)(1)(D). It’s a bit like me saying “Give me five apples.” And then you give me seven apples. Have you complied with my request? I think that question can only be answered by the context. If I’m standing on a see-saw and you hand me two too many apples and I consequently fall into the shark tank, then you haven’t complied with my request. If I just wanna eat five apples, then you’re probably good. The statute also empowers the regulators to “provide for a de minimis variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates.” Hence the +/-2, but that doesn’t really answer the prior question of whether the level of coverage is an “at least” or an “exactly.” But what strikes me most is just the complete lack of discussion in the regulation of what is a huge impact on what plans can be sold on the Exchange. As you know if you’ve read the Federal Register notice, they go through all kind of off-the-wall and relatively minor objections, but never this much larger issue. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 17, 2013, 10:46pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/54 "2013-12-17T22:46:35Z")
As previous, ISTM that the intention was to have uniform plan values, for comparison shopping purposes. At any rate, it’s clear that the regulators understood it that way. As did a group insurance group, a insurer actually in the business of offering coverage on the exchange, and the leading actuarial policy organization in the US. One outfit said otherwise. As above, I don’t think this is a legitimage question at this time. YMMV. ---
**Author:** ![Kobal2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kobal2/32/20_2.png) [@Kobal2](https://boards.straightdope.com/u/Kobal2)\ **Post date:** [December 17, 2013, 10:51pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/55 "2013-12-17T22:51:11Z")
> [@Richard\_Parker](#): > > (though the selected articles are a bit like the Hannity and Colmes show, right-wing while pretending to be balanced). Don’t you mean Hannity and Colmes ? ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [December 17, 2013, 11:10pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/56 "2013-12-17T23:10:21Z")
> [@Fotheringay-Phipps](#): > > At any rate, it’s clear that the regulators understood it that way. Heh. For certain definitions of clear, maybe. We’ll see, won’t we? ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 17, 2013, 11:19pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/57 "2013-12-17T23:19:37Z")
If we’re paying attention, yes. Most people won’t be. That’s the great thing about posting about something like this on a MB of this sort. You can declare all sorts of things and predict court challenges etc., and if nothing comes of it and you’re wrong, well by that time the issue will have long been forgotten anyway and people will be focused on other things and you will be declaring your opinion about those other things with equal vehemence, and who will remember or care about the fact that you turned out to be wrong about some assertion about a now-obscure issue all that time ago? [It’s actually somewhat relevant to me personally, because I’ve recently begun working on a project involving a model to advise employers whether they should terminate their plans and send their people to plans on the exchanges., We need to compare the current employer plans to the exchange plans, so it’s useful to know that the various tiers can be pinned down to this narrow a range. But for most people it will be forgotten in no time, and it’s on to a discussion about abortion or gays or whether some politician is or isn’t an idiot/sleazebag for saying or doing such-and-such.] ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [December 17, 2013, 11:22pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/58 "2013-12-17T23:22:32Z")
Yeah, I’ll skip the veiled ad hominem. So far, my SDMB batting average is pretty good. You’re free to look up the results of my other legal predictions. According to you, any legal issue here is frivolous and will be tossed out because there’s no ambiguity. As I said, we’ll see. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [December 17, 2013, 11:25pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/59 "2013-12-17T23:25:56Z")
> [@Fotheringay-Phipps](#): > > [It’s actually somewhat relevant to me personally, because I’ve recently begun working on a project involving a model to advise employers whether they should terminate their plans and send their people to plans on the exchanges., So who is the villain in this scenario, Obamacare or the employer? ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [December 17, 2013, 11:35pm UTC](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507/60 "2013-12-17T23:35:04Z")
> [@Richard\_Parker](#): > > Yeah, I’ll skip the veiled ad hominem. What was the veiled ad hominem? Nothing of this sort was intended, but my apologies if you’ve taken offense at something. My point was just a response to your “we’ll see, won’t we?”, in observing that an issue of this sort is unlikely to be a hot button topic long enough to make that meaningful. > [@](#): > > According to you, any legal issue here is frivolous and will be tossed out because there’s no ambiguity. That’s not my claim. My claim is that this has to be the standard assumption, the starting point of any discussion, since it’s been accepted by the regulators and those who deal with these things. Whether some lawyer can make a clever argument and overturn it in court is not something I could guarantee. I would be surprised if it gets challenged in court, but I’ve been surprised by things - I was surprised to find out that this was in fact the rule as I noted earlier. But what’s relevant in the context of this thread is that the OP is on solid ground and this is the _prevailing understanding of the law at this time_. And anyone who wants to challenge that can speculate that there might be room for an alternative interpretation based on the text of the law, but not to dismiss the OP’s point at this time. > [@Fear\_Itself](#): > > So who is the villain in this scenario, Obamacare or the employer? That’s a false dichotomy. Employers are always looking to spend as little as possible on their employees. That’s a given - you can call them villians if you like. (Personally I don’t think it’s as clear as that - I know I like to spend as little money on things as I can too - but I’m not going to argue this point.) The only thing that holds them in line is market forces. Obamacare is removing some of the pressure on them to provide coverage. (As predicted upfront by many many people.) [Previous page](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507.md?page=2) [Next page](https://boards.straightdope.com/t/why-did-democrats-choose-to-outlaw-the-best-insurance-plans/676507.md?page=4)