There are lots of reasons why your health care plan may have been cancelled but this one is arguably the most bizarre.
Please play the video or the following discussion will not make much sense.
Link if video does not play: Why Your Plan Was Cancelled: Health Insurance and the Affordable Care Act.
I am automatically skeptical of such videos and articles. So I did some digging. It appears the video has it right.
“De Minimis Variation”
PDF page 36 of 40 of Federal Register, Vol. 78, No. 37 / Monday, February 25, 2013 / Rules and Regulations, spells things out nicely.
§ 156.140 Levels of coverage. (a) General requirement for levels of coverage. AV, calculated as described in § 156.135 of this subpart, and within a de minimis variation as defined in paragraph (c) of this section, determines whether a health plan offers a bronze, silver, gold, or platinum level of coverage. (b) The levels of coverage are: (1) A bronze health plan is a health plan that has an AV of 60 percent. (2) A silver health plan is a health plan that has an AV of 70 percent. (3) A gold health plan is a health plan that has an AV of 80 percent. (4) A platinum health plan is a health plan that has as an AV of 90 percent. (c) De minimis variation. The allowable variation in the AV of a health plan that does not result in a material difference in the true dollar value of the health plan is +- 2 percentage points.
Outside of the video, the above obscure government doc was the only place I found an accurate discussion of bronze, silver, gold, and platinum ranges.
Since I did not have the term “de minimis variation” in my search, it took me a while to find that doc.
As Typically Presented
Most sites offer woefully inadequate explanations. For example Medical Mutual accurately defines Actuarial Value (AV) as “the percentage of total spending on Essential Health Benefits (EHBs) that is paid by the health plan,” yet, falls woefully short in describing the various metals as follows.
- Bronze: 60 percent of Actuarial Value
- Silver: 70 percent of Actuarial Value
- Gold: 80 percent of Actuarial Value
- Platinum: 90 percent of Actuarial Value
That is what we have come to believe, and similar explanations appear on numerous healthcare sites. Ten percent ranges seem reasonable, but they are against the law.
Health Insurance AVs
- 0-57 Invalid
- Bronze AV: 58-62
- 63-67 Invalid
- Silver AV: 68-72
- 73-77 Invalid
- Gold AV: 78-82
- 83-87 Invalid
- Platinum 88-92
- 93-100 Invalid
- Number of 1-Point Ranges: 100
- Acceptable Ranges: 16
- Invalid Ranges: 84
If for any reason, health care providers do not want to modify pre-existing plans that are just outside the acceptable ranges, their only option under the law is cancellation.
The legislation guarantees “If you like your plan you may not be able to keep it.”
What reason might insurers have to cancel plans?
Thanks to ACA, the providers all have captive audiences. They all understand that no other provider can offer a plan in anything but the 16 of the 100 possible ranges.
If a plan outside one of the allowed ranges makes a smaller percentage profit than something inside one of the ranges, there is a huge incentive for providers to simply dump the plan.
And Obamacare was supposed to increase competition!
Mike “Mish” Shedlock