Last week, Health and Human Services Secretary Kathleen Sebelius granted health insurance policy waivers to McDonalds and a number of other companies and organizations. Waivers that affect the health care coverage they provide to almost a million of their workers.
The issue? On September 23, 2010 regulations stipulating that insurance policies must provide at least $750,000 in benefits per year and no lifetime limit went into effect. The problem? The "insurance" that McDonalds offers its low-wage workers has a yearly benefits limit of $10,000.
And that's the quality plan!
In the case of McDonald's, according to the Journal, there are two options: Employees who go with the minimum plan pay $14 a week for a policy that won't cover more than $2,000 in medical bills a year. Employees who opt for the "generous" option pay about $32 a week for a policy that maxes out at $10,000.
These putrid excuses for health insurance ("You can blow through $10,000 in medical care with one emergency room visit.") are known as "Mini-Med" policies, and they "cover" millions of workers in the US (usually part-timers, and, I'd guess, mostly younger people).
In 2014, when most provisions of the PPACA (Patient Protection and Affordable Care Act) have taken effect such plans will be illegal; the PPACA will define what a minimal health insurance policy must cover and will outlaw any monetary limit on benefits. Subsidies will be offered for those who cannot afford this better coverage on their own dime. But until 2014,
Under the terms of the Affordable Care Act, the HHS Secretary Kathleen Sebelius has the discretion to allow waivers in cases of "special circumstances." HHS recognizes that the current use of min-med plans and the number of employees who would be impacted by any sudden change require additional regulations.
Companies asking for exemptions claim that if these waivers are not granted, they will have to either drop coverage or raise premiums beyond the point that their low-wage workers can afford to pay. It's certainly true that if benefit limits go up, premiums have to go up. No one is rationally going to argue that, all else being equal, insurers can afford to give you a policy that covers $750,000 in benefits versus a $10,000 cap without increasing your premium. And full-coverage, as we all know, is costly and getting costlier:
The average annual premium for individual coverage in an employer-sponsored plan was $4,824 in 2009, according to the Menlo Park, California-based Kaiser Family Foundation.
-- beyond the ability of someone making minimum wage or thereabouts to even consider.
But the question that isn't being asked in most of the newspaper accounts of this story is whether these mini-med policies are worth the paper they are written on.
To call ((Mini-med policies)) "insurance" is to distort the definition, since these policies would do very little to help people with even moderately serious medical conditions. ... And those are the people whom insurance is supposed to help, since they are the ones who face serious financial hardship or have serious trouble getting access to care. As Aaron Caroll, who now blogs at the Incidental Economist, wrote several months ago when the issue first came up, "There are a host of health insurance plans out there that are cheap. It's just that the majority of those also are crappy. Sure, they're great if you're healthy. They only stink when you get sick; but that's when you need them."
And the answer that isn't being given is: Almost Certainly Not. We know insurance companies are making a good profit on these plans with no risk (since benefit payouts are capped so low), otherwise they wouldn't be pushing them like hotcakes:
... the market for employer-sponsored mini med plans and other employer-sponsored limited benefit health plans is booming... "The mini medical market," says Edelheit, "has caught on and spread like wildfire."...
For many insurers, the lighter regulatory burden and conservative plan designs make the mini medical plan market far more attractive than the major medical market.
The people who are buying these policies are what would be known in casino parlance as 'suckers' -- people who (knowingly or unknowingly) are paying a huge vig (50% or more) for the privilege of knowing that if they bust (i.e., get seriously ill) they are totally screwed anyway. Only insurance companies like these plans:
For years, consumer advocates have criticized limited benefit health products. The critics have complained that some states let sales and administration costs eat up 50% of the premium revenue at limited benefit plan programs. The critics also worry that the policies are confusing to consumers, and they say workers would be better off if employers would stretch their benefits budgets by buying health plans with higher out-of-pocket costs.
The United States General Accounting Office published a report in 1988 which concluded that limited benefit health plans had little to offer the typical consumer.
Even some health insurance experts who are vigorous critics of health insurance mandates are unenthusiastic about mini medical plans.
The administration is caught between a rock and a hard place here. To not issue waivers opens them to the charge that the PPACA is forcing insurers out of the market, causing workers to lose existing coverage instead of gaining important protections. But to issue the waivers begs the administration to answer the question of why, when they are touting the removal of benefits limits as a major component of just-introduced PPACA reforms, they are allowing insurers to get away with not abiding by them.
And of course Congress seems to have acted as if such plans didn't exist when they drafted the PPACA.
I don't have any short-term solutions. As taxpayers, we are already paying the health care costs of seriously ill workers with these mini-med policies. When they exceed the policy's meager limit, they have nowhere to go but on Medicaid or to emergency rooms subsidized by federal dollars. It would be better to provide coverage directly and efficiently rather than indirectly and inefficiently, but what do I know?
As much as the whole system is a mess currently, it is good to realize one thing. Many people who are now counted as "covered" by this psuedo-insurance (and thus not tallied as part of the 50,000,000 who are uninsured, although they should be) will receive real coverage come 2014 because of the PPACA. Unless the Republicans have their way, that is.
It should be happening now, but better three years hence than continuing on with this kind of farce for decades more.
p.s. Ronald, your burgers suck too.