Despite the promise that “If you like the plan you are in, you can keep it,” the AP reports that plans are being cancelled all over the country because of ObamaCare. One insurer explains it this way:
- A very small share of the market today is “grandfathered” under ObamaCare. To be grandfathered, someone would have had the policy in 2010 and essentially make no changes.
- This means almost every policy on the street today in the individual and small group markets is not legal for one reason or another (essential health benefits, actuarial value ranges, etc.)
- So if policies are not going to be legal in 2014, then insurers have to either “amend” the policies to comply with ObamaCare. Insurers can only do that one of two ways:
* Cancel the policies and migrate individuals into new products that are compliant with the law. (giving the consumer a choice on which compliant product they want to migrate into)
* Amend the policies to comply with all the requirements and include a “rate action” with those amendments.
- How this is happening is a state-by-state decision, with some regulators asking us to cancel & migrate while others are asking us to amend. In most cases it will probably be a cancel & migrate.