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Last year, millions of Americans, including 73,000 Marylanders, lost the health insurance—President Obama assured them they could keep—due to Obamacare.
Cancellations will continue in the years to come.
These cancellations are a feature, not a bug in Obamacare.
In a new video, Mercatus Center, Robert Grayboes, a Senior Research Fellow for health policy explains why more cancellations are to come.
Obamacare (the Affordable Care Act) establishes four narrow bands of coverage based on actuarial value (AV) or the percentage of medical bills an insurance plan pays for. Beginning this year the AV of all plans must fit into the narrow Gold, Silver, Bronze, or Platinum bands with established under the law.
Bronze: AV of 58-62
Silver: AV of 68-72
Any insurance plans that pays and AV outside the bands is not considered insurance by Obamacare and must be cancelled.
The banding is so perverse that a plan with a AV of 59 is okay, while a plan with an AV of 98 is considered subpar.
In the video, Grayboyes compares Obamacare to a school. A grade of 59 would be passing, but a 98 would be an F. “In any other school you’d be the valedictorian” Grayboys says. But under Obamacare “you’re sub par and you fail.” “It’s not the fault of the insurance companies, by law they have got to cancel your policies if they fall outside one of those narrow bands.”
“Every year, under the ACA, the AV calculation changes,” says Grayboes. Using the example of a gold plan bought in 2014 that has an AV of 81 percent. After a couple of years at renewal time the plan changes to 83 percent—falling outside the gold band. “Guess what, its now subpar, its cancelled” Grayboyes states. Now you must find a new plan, and possibly a new doctor.
“You best get used to this year after year, after year, after year, that’s the way the ACA is written.”
Tags: actuarial value, Affordable Care Act, health insurance, Obamacare
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