As health reform continues to dodge and weave its way toward the 2014 goal line, footwork has become increasingly important. The latest obstacle, and a delicate one for the Obama administration to sidestep, is the issue of "mini-med" health insurance plans.
Mini-med plans are the inexpensive, limited health insurance plans typically offered to employees in the manufacturing, retail, and fast food industries. The "mini" refers to the coverage amount, which is typically capped at, say, $100 per day or $2,000 to $10,000 per year. There are currently about 1.4 million workers with group mini-med coverage.
Considering the cost of medical procedures today, and given that a mini-med policy can cost employees a third of their coverage amount in premiums, critics contend that such coverage should not be considered health insurance at all. But if you're one of those workers, chances are you prefer some coverage, however thin, to paying out-of-pocket for your health care.
Regardless of one's position on mini-meds, one thing is clear: they won't meet the new minimum daily benefit requirements of the Affordable Care Act, specifically the $750,000 minimum cap on annual health care benefits and the new medical loss ratio, which requires that 80 percent to 85 percent of premiums be spent on benefits instead of overhead expenses in 2011.
McDonald's caused a major kerfuffle recently when, according to a Wall Street Journal report, it notified the administration that it could drop mini-med coverage for its 30,000 workers unless granted a waiver. McDonald's denied it, the Obama administration denied it, but as Chief Bromden observed in "One Flew Over the Cuckoo's Nest:" "It's the truth even if it didn't happen."
The outcome: McDonald's and 29 other businesses were granted a one-year waiver on the ACA requirements.
The problem, of course, is the timetable for health reform, which is a little like watching the scenes of a movie out of sequence. The ACA will ultimately require all of us to purchase health insurance, to better spread the costs of coverage. There will ultimately be tax credits to help businesses provide far better coverage than mini-meds.
Unfortunately for workers with mini-med coverage now, the opportunity to purchase better low-cost coverage through the new health insurance exchanges is still more than three years away.
Add to this the likelihood that the new paradigm will simply drive some insurers out of the market entirely. The Principal Financial Group already gave its notice. Other health insurance companies, including Aetna, Anthem Blue Cross, Cigna and UnitedHealth Group, have already started identifying and dropping policy lines that no longer look like winners.
Mini-med waivers are the prudent move on the field at this time. To do otherwise could potentially mean a loss of health insurance coverage, however meager, for people who depend on it.
That said, we'll know that health reform is truly upon us when mini-med coverage no longer serves as the minimum standard for American health insurance.
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