Mini-Med Plans Don’t Really Help Workers

One of the provisions of the PPACA was designed to do away with “mini-med” plans that place low caps on annual and lifetime benefit amounts.  As of next year, policies must have annual maximums of at least $750,000 and this amount will increase through 2013, becoming unlimited in 2014.  But the Department of Health and Human Services has granted waivers to 30 companies and organizations – impacting about one million workers – to allow them to continue to offer mini-med plans for at least the next year.  The concern was that if the employers and unions involved had to increase the annual caps on the policies to $750,000 next year, some of them might have opted to discontinue the health insurance all together, and HHS was concerned that this would adversely impact the employees who are currently covered by the mini-med policies.

McDonald’s is one of the companies that was granted the waiver so that they can continue to offer mini-med policies to nearly 30,000 part-time hourly employees.  They offer a mini-med policy that has a $2000 annual maximum benefit, and costs workers $14/week.  That’s roughly $728/year in premiums, or about $61/month for a policy with a maximum annual benefit of $2000.  For workers who need the occasional doctor visit, or even stitches to repair a damaged finger, that amount will suffice.  But it’s hard to really think of it as insurance.  A single night in the hospital will likely exceed the annual limit, as will most surgeries, or even an MRI in some cases.  The problem with policies like this is that the employees might not take the time to read the fine print, and might just think “Ok, I pay $14/week and I have health insurance.  Done and done.”  Then they go along thinking that they are covered if something happens, only to find out exactly how bare-bones their health insurance is when they need it most.  Remember John Q?

If these employees weren’t offered the mini-med plan in the first place, they might be able to find high deductible health insurance (that would truly provide coverage in case of a catastrophic illness or injury) by shopping around in the individual market.  For a 25 year old in Denver, there are numerous health insurance policies available with premiums in the $55 – $65/month range.  The plans have deductibles that range from $2500 to $10,000, and some even have copays for office visits (usually $35).  They are all “real” health insurance policies that will provide a good safety net in case of a high cost injury or illness.  My concern with the availability of mini-med plans with such low annual limits is that they provide almost no coverage at all in the case of a serious medical problem, and yet they might discourage employees from looking around for a better option, simply because it’s easier to just complete the paperwork provided by the employer and enroll in the mini-med plan.

HHS wants to protect employees from losing their mini-med plans, and has issued the waivers in order to help those employees keep their policies in place.  But I wonder if that’s actually the best thing for the workers involved?  Some of the policies in question might be better plans that have annual limits nearly as high as the minimum required by the PPACA.   But is it really beneficial to workers if we help them keep policies with $2000 annual caps?

About Louise Norris

Louise Norris has been writing about health insurance and healthcare reform since 2006. In addition to the Colorado Health Insurance Insider, she also writes for healthinsurance.org, medicareresources.org, Verywell, Spark by ADP, and Boost by ADP, and Gusto. Follow on twitter and facebook.

Comments

  1. When I was reading the news about the HHS waivers- this is exactly what I was thinking.

    It is becoming clear to me that the administration does not have a good point team on Health Care Policy and/or they do not take the time to think things over properly- reacting to quickly to things as a result of media involvement.

    There should be a good Health Policy point team in place from now going forward- one that does not change too much with different administrations- as the new health Policies will most certainly need to be adjusted over time- and there will need to be competent people able to analyse situations properly.

    The Wall Street Journal publishes an erroneous article that McD’s might be dropping Mini-med and a ton of people, who may not have all the information (such an imperfect market) get up in arms- when they are unaware that getting a high duductible plan in the Exchange would likely be a better option for them if they really need medical care.

    They might even be able to augment these high deductible plans with a Health Savings Account (HSA)- I do believe that above a certain amount (is it $2000?) deductible one can create an HSA- and in most states, you can get both a state and federal deduction (only 3 states do not have state deductions- but all have federal deductions).

    Even more- this could be an incentive for Hi Deductible Health Plans to begin competing on costs per certain types of Doctor Visits. Remembering that part time and/or low wage workers are far more sensitive to costs- there could be a special price plan for them. For example, if there is an acute event- such as a need for stitches or some other small emergency- the charge could be $25-$30 [this will give incentive to clinics to provide this kind of care]. However, if there is an illness the charge could be a bit lower- say $10-$15. This way, people will still be conscious of overuse of services, and not want to always go to the doctor and thereby use services when they are more needed- but may be less likely to wait until the illness gets so serious that they end up going to the Emergency room (there could be a perverse incentive to wait for the emergency rooms if the costs of access are not low enough- and Emergency Room care is far more expensive). In line with this- mayeb specialist visits should be about $20-$30 for the similar reasons as above. This is a very different population with different cost sensitivities and different behaviors. They could possibly benefit from pre-designed wellness plans and information from plans like these.

    Moreover, if health plans do not take the opportunity to adress the needs of this different population- then there could be a new opportunity for some retail health clinics to cater to part time workers- lowering their costs to catch volume of services- they could charge, say, $10-$15 per Doctor visit for a $5 per month membership fee as an augmentation to High Deductible plans (who might charge more for Doc visits).

  2. All the controversy over McD’s dropping mini-med plans – but is paying $728/year worth “insurance” that caps out at $2,000?

    As far as I know, even the take-up rate on Colorado’s “basic” plan is low – because while cheaper, doesn’t cover much.

    Same appears to be true for the new CarePoint limited benefit plan that San Luis Valley – HMO is offering after the pushed through a bill (which we opposed) to allow HMOs to offer limited benefit plans. They’ve so far seen very low take-up, which they apparently attribute to employees (its offered through employers) not understanding the importance or value of health insurance. But maybe its that they *do* understand the value, and so aren’t willing to pay for the LBP.

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