Quote-of-the-day mailing list
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Subject: qotd: Some employers, insurers conspire on bare-bones plans
Date: Mon, 20 May 2013 11:13:32 -0700
From: Don McCanne <email@example.com>
To: Quote-of-the-Day <firstname.lastname@example.org>
The Wall Street Journal
May 19, 2013
Employers Eye Bare-Bones Health Plans Under New Law
By Christopher Weaver and Anna Wilde Matthews
Employers are increasingly recognizing they may be able to avoid certain
penalties under the federal health law by offering very limited plans
that can lack key benefits such as hospital coverage.
Benefits advisers and insurance brokers—bucking a commonly held
expectation that the law would broadly enrich benefits—are pitching
these low-benefit plans around the country. They cover minimal
requirements such as preventive services, but often little more. Some of
the plans wouldn't cover surgery, X-rays or prenatal care at all.
Federal officials say this type of plan, in concept, would appear to
qualify as acceptable minimum coverage under the law, and let most
employers avoid an across-the-workforce $2,000-per-worker penalty for
firms that offer nothing.
The idea that such plans would be allowable under the law has emerged
only recently. Some benefits advisers still feel they could face
regulatory uncertainty. The law requires employers with 50 or more
workers to offer coverage to their workers or pay a penalty. Many
employers and benefits experts have understood the rules to require
robust insurance, covering a list of "essential" benefits such as
mental-health services and a high percentage of workers' overall costs.
But a close reading of the rules makes it clear that those mandates
affect only plans sponsored by insurers that are sold to small
businesses and individuals, federal officials confirm. That affects only
about 30 million of the more than 160 million people with private
insurance, including 19 million people covered by employers, according
to a Citigroup Inc. C +0.20% report. Larger employers, generally with
more than 50 workers, need cover only preventive services, without a
lifetime or annual dollar-value limit, in order to avoid the
Such policies would generally cost far less to provide than paying the
penalty or providing more comprehensive benefits, say benefit-services
Administration officials confirmed in interviews that the skinny plans,
in concept, would be sufficient to avoid the across-the-workforce
penalty. Several expressed surprise that employers would consider the
Firms now offering low-cost policies known as mini-meds, generally plans
that cap benefits at low levels, could favor the tactic. Companies
sought federal health department waivers to cover nearly four million
with mini-meds and other similar plans, which will be barred next year.
Some employers are "thinking of this as a replacement for the mini-med
plan," said Tracy Watts, national leader for health-care reform at
Mercer, a consulting unit of Marsh & McLennan Cos.
San Antonio-based Bill Miller Bar-B-Q, a 4,200-worker chain, will
replace its own mini-med with a new, skinny plan in July. The new
plan... will cover only preventive services, six annual doctors' visits
and generic drugs. X-rays and tests at a local urgent care chain will
also be covered. It wouldn't cover surgeries or hospital stays.
Tex-Mex restaurant chain El Fenix also said it would offer limited plans
to its 1,200 workers, covering doctors visits, preventive care and
drugs, but not hospital stays or surgery.
Comment: Imagine health insurance not covering hospitalizations nor
surgery. Yet this is still possible because the Affordable Care Act
applies the essential health benefit requirement only to plans for small
businesses and individuals and not to larger employers.
This has opened up the opportunity for a conspiracy between larger
employers who could care less whether or not their employees have health
insurance and private insurers who are quite willing to sell these
almost worthless bare-bones products as long as there is a profitable
market for them.
The solution is obvious. Cover all care that people need, and then
provide that coverage to everyone, automatically. Maybe these uncaring
employers might not like that, but when the taxes to pay for an
equitable system are obligatory, they would get used to the idea of
their employees being able to obtain health care when they need it. Not
such a bad idea after all, especially when their competitors are treated