How Obamacare could outlaw your perfectly good health plan

Last year, when Americans faced a wave of cancellation notices for health insurance plans they’d been happy to have, President Obama tried to explain this was a feature, not a bug, of Obamacare. The plans being canceled, he said, were “substandard” plans that didn’t offer people as much protection as they thought they had.

“But ever since the law was passed,” he said in Boston last October, “if insurers decided to downgrade or cancel these substandard plans, what we said under the law is you’ve got to replace them with quality, comprehensive coverage — because that, too, was a central premise of the Affordable Care Act from the very beginning.”

This was rather insulting: The government knows better than you, you poor, foolish consumer. And in the end, it apparently wasn’t as big of a problem as the president had claimed. His administration backed down and decided to let people continue using these “substandard” plans into 2017.

The “substandard” part was plainly false: Some people were receiving cancellation notices because their plans didn’t cover birth control or maternity care, and it didn’t matter if they were in their late 50s and didn’t want or need such coverage.

As it turns out, the notion that only “substandard” plans were being canceled appears to be false as well. Robert Graboyes of the Mercatus Center at George Mason University explains why in this short video:

If you can’t or don’t want to watch, here’s the gist: Obamacare allows only plans that fit into one of its four bands of coverage: bronze, silver, gold or platinum. Plans are placed into one of these bands based on the share of health costs they cover, known as their actuarial value (AV).

But the bands don’t cover the entire spectrum. Take a look at this photo, a still from the Mercatus video above:

How Obamacare outlaws certain high-quality plans as "substandard." Credit: Mercatus Center

How Obamacare outlaws certain high-quality plans as “substandard.” Credit: Mercatus Center

If your plan’s AV fits in between two bands, it is just as unlawful under Obamacare as one whose AV is below the bronze plan. So your plan could be better than the bronze plan but still be disallowed under the law.

Here’s the practical fallout, as explained by Graboyes:

“Let’s say you buy a gold plan with maybe an AV of 81 percent. Now, when it’s time to renew your plan in a year or two, you find — uh oh — my plan has moved from 81 percent to 83 percent. Guess what? It’s now ‘sub-par’; it’s canceled. At this point, you have to go find another plan, you might have to find a new hospital; you might even have to find a new doctor. And you best get used to this year after year after year. That’s the way the ACA is written.”

So, 60 percent of AV is OK, but 83 percent isn’t. Got it?

But don’t worry; this is soooooo much better than letting the market handle things.

Reader Comments 0

100 comments
CuriousPrime
CuriousPrime

If you think you have "a perfectly good insurance plan," confirms the need for mental health coverage.

Ralph-25
Ralph-25

Kyle - I am not sure you understand the insurance business - everybody in the pool shares the costs and the benefits, i.e., birth control, medications, surgery, Obstetrical care, pediatric care, colonoscopic screening, etc. - hey, guess what, nobody in the pool needs every available test and treatment.  But, in all policies, eventually, this coverage is provided, if needed, for everybody.  How can we afford it?  More people in the pool.  Corporate profits reduced by law from 50 percent to 25 percent.  Gradual standardization of care to scientifically proven therapy only.  The next time someone tells you to be afraid of socialized medicine, show them this:

http://www.upworthy.com/the-next-time-someone-tells-you-to-be-afraid-of-socialized-medicine-show-them-this-3?c=ufb1




CherokeeCounty
CherokeeCounty

'letting the market handle things'

Your partner in crime Mr. Bookman gave a perfect example of the market place at work in health care, Kyle.

The market doesn't work for health care.  For any free market to work, consumers have to be able to consider and compare quality and prices, so they can make intelligent decisions.  That doesn't happen with medical care.  Just consider, you wake up at 3 AM with your child screaming because he's sick - what do you do?  Call around to the various hospitals to see which one is cheapest?  Do an internet search to see which one has the best results?

Of course not, you get him to the nearest emergency room.  Fetishizing the free market is just silly, in this case.

And of course, the ACA isn't perfect.  But it's not going to be changed until Republicans finally give up trying to motivate their base by shaking their fists at Obama and conducting endless repeal votes.  If they actually sat down and worked with him to try to improve the law, the crazy Republican base would be outraged.  So it won't happen for awhile.

Kyle_Wingfield
Kyle_Wingfield moderator

@CherokeeCounty The vast majority of health-care spending in this country is for chronic diseases, which are managed over the long term and afford plenty of time for consumers to make informed decisions.

RantNRave
RantNRave

SPOILER ALERT!! 

U.S. says 7.3 million with Obamacare health plans HAVE PAID premiums

"

The 7.3 million figure would represent a 91 percent premium payment rate. It is also a larger number than the nonpartisan Congressional Budget Office's enrollment forecast of 6 million for the Obamacare marketplace.

But HHS officials cautioned against comparisons with earlier estimates, saying marketplace enrollment fluctuates in time as people change jobs, marry or experience other life-changing events."

reuters

MHSmith
MHSmith

Look how the ACA market is handling things, Kyle  :)

.

.


Some good news about Obamacare that even conservatives should love

... what about when the free market embraces Obamacare? What’s a conservative to think then?

That’s what new numbers released by the Department of Health and Human Services show. The new data reveals that the number of insurers offering coverage through the exchanges is set to increase by 25 percent next year. In some states, the number of participating insurers will double. For every insurer that has dropped out, five more have joined.


In other words, insurance companies are lining up to participate in the exchanges. This increased competition should help keep premium hikes down, since as any free marketeer will tell you, that’s what competition does.

The law’s opponents, of course, predicted that the exchanges wouldn’t be attractive to insurers, partly because of a lack of young people signing up for insurance. Left with a bunch of old, sick people whom they couldn’t insure profitably, the insurers would avoid the exchanges like Ebola. This lack of competition would lead to enormous premium increases, as the few remaining insurers jacked up charges to avoid losing money. Presto: the Death Spiral!

But the opposite happened. 

 http://www.washingtonpost.com/blogs/plum-line/wp/2014/09/24/some-good-news-about-obamacare-that-even-conservatives-should-love/


Kyle_Wingfield
Kyle_Wingfield moderator

@MHSmith Really? Companies are lining up to offer a product knowing that a) their competitors can't really undercut them, and b) consumers HAVE to buy it? I'm shocked, shocked!

The key line here, of course, is the part about a "lack of young people signing up for insurance." I don't recall people predicting it would happen so much as saying IF it happened (and there was for several months evidence it was happening), that it would be a problem for the insurers.

Of course, we are still in the portion of the program where insurers are more or less guaranteed not to lose much money, so I'm not sure this is really settled yet.

MHSmith
MHSmith

@Kyle_Wingfield @MHSmith 

Who says.. a)  their competitors can't really undercut them?

There was a good bit of price difference between the three choices I had when buying my ACA policy.(better than $100 a month) 

Next open enrollment season it will be even more competitive, you can bet on it. 

So I rate this claim of "can't really undercut them", False based on personal real life experience.

b)  yesterday your compliant was toward nullifying pre-existing, now you contradict yourself by complaining about the individual mandate. As you know the individual mandate is necessary to eliminate people finding out they have a major sickness and then running out to buy coverage. 

As they say in politics Kyle, you cannot have it both ways. Now, how shocked , SHOCKED! are you?

You know that a everybody-buys-in mandate  is the only way insurers can stay in business under the ACA mandates, otherwise no body will buy insurance until they have a serious condition which would bankrupt not only the insurers but the entire system - Keep it real.

c) No, it is not settled yet. There will be reforms, and again, the "risk corridor" you cited was put into place to cover the losses on the mandated coverage of pre-existing conditions. Which should go away as the majority get into the system thereby eliminating pre-exsiting conditions. 

However one thing you didn't point out about the  "risk corridor": The government will make money off this deal if the insures don't lose money. As it appears, they have not.


MHSmith
MHSmith

The ACA seems to be improving the way the market handles things, Kyle.

Thanks to Obamacare, virtual-reality doctors are booming

A fast-growing company called Teladoc has raised $100 million to pair up physicians and patients over the web.

Obamacare might not let you keep your old doctor, but it may pay for a virtual-reality physician—and you won’t even have to get out of bed to get diagnosed...

 ...Obamacare—or the Affordable Care Act, as it is officially called—has been a catalyst for Teladoc’s recent growth surge. The law puts pressure on doctor’s offices, who are seeing more patients, as well as employers, who are looking to cut healthcare costs. As a result, telemedicine is becoming increasingly popular as a cheaper alternative to going to the emergency room...

 http://fortune.com/2014/09/24/obamacare-telemedicine-doctors-booming/

MHSmith
MHSmith

Obamacare to save U.S. hospitals $5.7 billion in uncompensated care: government

(Reuters) - The Obama administration on Wednesday said it expects expanded health coverage under the Affordable Care Act to save U.S. hospitals $5.7 billion this year on the cost of caring for uninsured Americans.

A report by the U.S. Department of Health and Human Services said nearly three-quarters of the savings, $4.2 billion, would occur in states that have opted to expand the Medicaid healthcare program for the poor as part of the law, popularly known as Obamacare....

http://www.reuters.com/article/2014/09/24/us-usa-healthcare-hospitals-idUSKCN0HJ27920140924

FIGMO2
FIGMO2

Seems the exchanges aren't paying their insurance brokers.

Deadbeats. 

whatsinthetaxes
whatsinthetaxes

Mercatus Center = think tank funded by the Koch Brothers. So, take that into consideration when analyzing the data. 

IReportYouWhine
IReportYouWhine

Our first false premise is that obamacaid is health insurance.

IReportYouWhine
IReportYouWhine

i.e.


The thing is, though, there's a difference between care and coverage. Insurance programs, whether Obamacare or Medicaid, only provide coverage. It's doctors who provide care. But because government insurance programs -- even money-sucking ones like Medicaid, which costs $450 billion a year -- can't pay doctors enough and smother them with paperwork, doctors are hard to find. Without doctors, coverage doesn't mean much.


http://www.usatoday.com/story/opinion/2013/11/11/obamacare-health-care-obama-medicaid-avik-roy-column/3489067/


Paying up the wazoo is only the first problem.

RantNRave
RantNRave

LET US NOT FORGET..........

#1...Georgia is one of 24 states that currently REFUSE to EXPAND MEDICAID, as provided by OBAMACARE.

#2...Georgia RANKS 36 among states in support for people needing long-term care.......

MHSmith
MHSmith

What's going to happen when this "uh oh your ACA policy is sub-par" isn't canceled?


I'm betting they won't be. 

Now, let' see, how many times has Obama amended his own law, Kyle? 


     

IReportYouWhine
IReportYouWhine

Roughly 100,000 households in California were in danger of losing their health insurance by the end of next month because they had not verified their citizenship. The LA Times reports that half the backlog has now been cleared, leaving another 50,000 people who still need to be contacted.


http://www.breitbart.com/Breitbart-California/2014/09/23/Covered-California-Call-Centers-Fall-Behind-as-Citizenship-Verfication-Takes-Precedence


I wonder what "has now been cleared" means.

FIGMO2
FIGMO2

@IReportYouWhine And this there's this from Jamie Dupree's blog:


 While federal officials have resolved hundreds of thousands of data discrepancies for consumers enrolled in the Obama health law, 115,000 people could lose their coverage at the end of September, because they have not been able to prove that they are U.S. citizens or legal residents.

And officials say another 363,000 people – from 279,000 households – could see tax subsidies trimmed that help them buy health insurance, because of discrepancies over how much income those people make.

“We recognize that we still have work to do here,” said Andy Slavitt, the number two official in charge of the Obama health law.

IReportYouWhine
IReportYouWhine

Voters who think the federal health law is a bad idea still significantly outnumber those who think it’s a good idea heading into November midterms, the new NBC News/Wall Street Journal poll shows.


Among all registered voters captured in the September poll, 34% are in favor of the 2010 Affordable Care Act, and 48% are against it.


http://online.wsj.com/articles/wsj-nbc-poll-finds-that-almost-two-thirds-of-americans-back-attacking-militants-1410301920?mod=WSJ_hp_LEFTTopStories


It's so "great" that nobody likes it.

MarkVV
MarkVV

The bellyaching of the conservatives about Obamacare is becoming rather tedious. Now that it is becoming clear that Obamacare is here to stay, it is also clear that these kinds of complaints are based much more on political reasons that concerns for consumers, The Republicans had their chance to come up with their plan to do something about the disastrous pre-Obamacare system, and they blew it. So now they attack everything they can to turn people against the Democrats. This includes the silly complaints about plans covering birth control and maternity care for people in late 50s, and now another silly complaint about the inability to have a plan in between the four bands of coverage. And the most ironic silliness of all – the market would have handled it better. As if we had not seen how the market had handled it!

DownInAlbany
DownInAlbany

@MarkVV Close to 50% of America still doesn't like the law.

They are ALL cons.  Oh, OK.

Hedley_Lammar
Hedley_Lammar

@Captain-Obvious @MarkVV This includes the silly complaints about plans covering birth control


I read somewhere where this basically amount to around1 dollar per month per plan.


That is what they are getting so upset about.


A buck wont even get you a small coffee at Dunkin Donuts.

DS
DS

@MarkVV

It's interesting that Obamacare polls poorly, but many of its provisions poll well.

* No longer allow insurers to deny coverage for preexisting conditions.

* No longer allow insurers to impose lifetime caps on coverage.

* Require insurers to refund excess premiums.

* Allow young adults to stay on their parents' coverage until age 26.

* Require people to pay something according to their means, rather than pay nothing and having their healthcare costs subsidized by the rest of us through higher healthcare costs and insurance premiums. When he was governor of Massachusetts, Mitt Romney pitched this feature as preventing people from mooching off of the system by making many of them pay something.

* Once covered, make it easy for people to get annual checkups, which is cheaper than letting health problems go unchecked until serious complications develop.

ACA is a complicated system. Single payer would be cheaper and easier to understand. But ACA is better than what we had before. It surely has flaws, but these should be easy to fix, if only Congress would stop grandstanding and get back to work.

Don't Tread
Don't Tread

Of course there are problems...it's by design.


The idea is for the government to be in complete control of healthcare...and the individual receiving it.  That way, they can cut off Grandma's benefits (or yours) if you vote the wrong way or dare to exercise rights they don't particularly care for.

FIGMO2
FIGMO2

Enlightening to say the least. Those who don't think probably wouldn't have...

Obama and his dems have forced everyone to undergo his Adjustable Gastric Banding Surgery.

schnirt

JeffreyEav
JeffreyEav

So the grading system can't be fixed? Not even by a republican house and senate?

Maybe y'all should try to repeal the whole thing again.

MHSmith
MHSmith

@JeffreyEav 

He, he, he 

The Republicans have already given up on that idea. The majority of people want to fix not repeal the ACA. The GOP will likely win a majority in Congress this election but they will not win a 2/3 majority necessary to override a veto. Obama will veto anything passed to repeal the ACA that has less than the veto proof majority.

 

Like I said after the 2012 defeat, 2017 (if the star above shine on the GOP once again) would be the earliest possible time the GOP could repeal Obamacare. 



Finn-McCool
Finn-McCool

"At this point, you have to go find another plan, you might have to find a new hospital; you might even have to find a new doctor."


Like if you change jobs? I think we are used to this.


By the way, I lose my doctor on the 15th of next month thanks to Gov Deal working it so that state employees only have 1 choice for health care. If your network drops Blue Cross, you are out until after Jan 1st 2015.

PudHead
PudHead

@Finn-McCool  

Funny how when I said a very similar thing a few days ago, the wonderful liberals on this blog had the answer for me. “Maybe I need a new job.” Strange how liberals don’t even like their own advice...right Finn?

 

Finn-McCool
Finn-McCool

Kyle, they still aren't showing your blog's RSS feed info on the RSS feed link. I need this to feed to my Feedly or it gets hungry and angry and there is hell to pay for me and my family.


Can you ask your IT folks to get on it?

MHSmith
MHSmith

When Allen Greenspan trusted Wall Street and the banks to handle the financial market things without all those old pesky prohibiting banking and financial regulations, things worked sooooooooooooooo much better, right?


How did that laissez-faire "MARKET DRIVEN SOLUTION WORK FOR US" Kyle?


Just sayin'

Kyle_Wingfield
Kyle_Wingfield moderator

@MHSmith "without all those" regulations? Please. The SEC had an office in the banks that failed. Maybe they weren't doing their jobs, maybe the regulations were badly drawn ... but let's not pretend they weren't regulated, and highly so.

MHSmith
MHSmith

@Kyle_Wingfield @MHSmith Maybe they were told not to do their job by the people at the top: Greenspan, Ruben and Summers who like you think the market can handle things better if "left alone". 

And now, let's not also pretend Kyle, you would have those ACA mandates I spoke of removed in a heartbeat, now wouldn't you? :)

Kyle_Wingfield
Kyle_Wingfield moderator

@MHSmith I think the same goals could be accomplished in less coercive ways. For example, by making it illegal to deny coverage for a pre-existing condition to anyone who had had continuous coverage for X number of months.

And it's not that I think a market completely "left alone" would be perfect all the time; it's that I recognize the regulators' efforts to "fix" things typically substitute new problems for old ones, and often more problems for fewer ones.

MHSmith
MHSmith

@Kyle_Wingfield @MHSmith 

To a point your first paragraph has legs but weak ones in that some people were never able to get coverage before being diagnosed with a pre-existing conditions .

Nah, I'm for keeping everyone of those mandates and adding to them.


So because life itself is imperfect most of the times, we let the market write it's own rules? 


Nah , I like what I have supported in the past. When a new regulation is written, it has to go back to Congress for approval before it can be enforced as law.

LogicalDude
LogicalDude

@Kyle_Wingfield @MHSmith " illegal to deny coverage for a pre-existing condition to anyone who had had continuous coverage for X number of months."


I recall that being the way it was before. "Oh, you HAD coverage?  Sorry about that denial of coverage letter we sent you.  You can ignore that." 


Denying coverage for pre-existing conditions is not the way to take care of your fellow man. (and yes, Universal Healthcare would take care of all of this type of thing.  everybody would already be covered.) 

MHSmith
MHSmith

@LogicalDude @Kyle_Wingfield @MHSmith 

That's one of the reason there is an ACA. The other reasons are found in the remaining ACA mandates on these profit motivated insurance companies who have stock listed on the New York Exchange that have investor seeking investment returns not anyone's good health.   


Universal Healthcare would take care of all of this type of thing. 

The Swiss system does that and it is not a single payer. system. Conservative use to advocate that system but since Obamacare and Obama, they have been against anything Obama  - even if they were for it, before now being against it. 

For me the ACA mandates stay in place with more to be added.   

RafeHollister
RafeHollister

Just more "evening" of the playing field, so we all suffer equally.  Folks who could pay for and were healthy enough to afford very good individual healthcare plans, had to take the hit, so we can "afford" to insure more folks.  The same is going to have to happen with the employer provided insurance as well.  We just can't have some folks with lower premiums and lower deductibles than Obamacare policies, that is just bad optics.


Most all those plans that folks had and liked, which Obamacare eliminated, had better deductibles and often equal or better premiums.  Folks would not have voluntarily bought a family plan with a $12, 000 deductible. 


To make Obamacare seem more competitive, they needed to knock down the competition.


BTW, we are almost a year out, think we will ever get the numbers from last year?  How many enrolled, how many are still enrolled one year later.  How many of the enrolled got subsidies, how many previously had insurance prior to Obamacare.  

DS
DS

@RafeHollister

The numbers you asked about have been reported. 8.1 million enrolled, 7.3 million have paid, or about 90%. The CBO expected 6 million, so actual beat predicted. Insurers expected 85% would pay, so actual beat predicted. 85% got subsidies, and about 60% were previously uninsured.

LogicalDude
LogicalDude

I'm curious as to the vertical axis value, and why there are narrow bands for the qualified plans.  So, there are plans SO GOOD that they are above Platinum and are to be cancelled?


I'm just wondering which plans these are. 


Can congress correct this in the law by widening the bands?  I find it incredibly odd that there are gaps like this.  But then, laws can be incredibly odd. 


The fix is not in repealing the ACA, the fix is in widening the bands. (if, you know, the bands exist in real plans. I'd like to compare some of those plans with what's available now.)


straker
straker

DawgDad


Please advise as to how I can "raid the Treasury" and sell my access and influence as I'm a little short this month.  My Socialist  agenda can wait, however.

Likewise
Likewise

But don’t worry; this is soooooo much better than letting the market handle things.

__________________________________________________________________

Uh Kyle - This is the "market."

Kyle_Wingfield
Kyle_Wingfield moderator

@Likewise The government tells companies what they must offer and what they can charge; it tells consumers they have to buy the product. We are farther away from having a health-care "market" than ever before.

Kyle_Wingfield
Kyle_Wingfield moderator

@consumedconsumer "It's the same market it ever was"

Not true in the least. There are more mandates now, less price flexibility and, as demonstrated by the video in this post, fewer options for consumers. (By "options," I mean actual alternatives, not the sheer number of plans offered, since they more or less offer differently named versions of the same plans.)

consumedconsumer
consumedconsumer

@Kyle_Wingfield sorry, but even with all that, it's still basically the same functioning system we started with - more rules and regulations is all . . . but pretty much the same players control the action.


insurance is and always will (or at least should) be regulated. 

consumedconsumer
consumedconsumer

@Kyle_Wingfield @Likewise It's the same market it ever was - just more people get to participate now. Corporations still call the shots. There is no single payer. There is no universal health care. 


The government merely tells companies the minimum they must off to call it health insurance and regulates what they can charge. Consumers have to buy the product or pay a fine, thus the increase in participants. 


Do I love it. Nope. But I didn't like the old ways either.