Posted on 05/23/2013 4:25:40 AM PDT by Kaslin
Would you like to have a "skinny" health insurance policy? Probably not. But if you're employed by a large company, you may get one, thanks to Obamacare.
That's the conclusion of Wall Street Journal reporters Christopher Weaver and Anna Wilde Mathews. They report that insurance brokers are pitching and selling "low-benefit" policies across the country.
You might be wondering what a "skinny" or "low-benefit" insurance plan is. The terms may vary, but the basic idea is that policies would cover preventive care, a limited number of doctor visits and perhaps generic drugs.
They wouldn't cover things such as surgery, hospital stays or prenatal care. That sounds similar to an auto insurance policy that reimburses you when you change the oil but not when your car gets totaled.
You might ask how Obamacare could encourage the proliferation of such policies. It was sold as a way to provide more coverage for more people, after all.
And people were told they could keep the health insurance they had.
As Weaver and Mathews explain, Obamacare's requirement that insurance policies include "essential" benefits such as mental health services apply only to small businesses with fewer than 50 employees.
But larger employers, they write, "need only cover preventive service, without a lifetime or annual dollar-value limit, in order to avoid the across-the-workforce penalty." Low-benefit plans may cost an employer only $40 to $100 a month per employee. That's less than the $2,000-per-employee penalty for providing no insurance.
"We wouldn't have anticipated that there'd be demand for these type of Band-Aid plans in 2014," the Journal quotes former White House health adviser Robert Kocher. "Our expectation was that employers would offer high-quality insurance."
Oops. It turns out that Friedrich Hayek may have been right when he wrote that central planners would never have enough information to micromanage the economy.
It's probably true that businesses trying to attract and retain high-skill employees for long-term positions have an economic incentive to offer generous and attractive health insurance. Otherwise they'd lose good people to competitors.
But the kind of businesses mentioned in the Journal story -- restaurants, retailers, assisted-living chains -- tend to employ lower-skill workers who typically work there only temporarily.
In a high-unemployment economy they may not need to offer gold-plated health insurance to get the workforce they need.
Such employers would have to pay a $3,000 penalty for each employee who buys insurance on Obamacare's health insurance exchanges. But it seems likely that many workers, especially young ones, would opt not to pay the hefty premiums for that.
The problem here is that Obamacare's architects seem to misunderstand the concept of insurance.
People buy insurance to pay for low-probability, high-cost and undesirable events. It doesn't make sense to hold onto enough cash to replace your house if it burns when you can buy an insurance policy that will cover that unlikely disaster.
But Health and Human Services Secretary Kathleen Sebelius has a different idea of what insurance is.
In response to an American Society of Actuaries report that health insurance premiums would rise 32 percent under Obamacare, she said, "Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus."
Her idea apparently is that insurance should pay for just about every health care procedure.
In her defense, the World War II decision to make the cost of health insurance deductible for employers and nontaxable for employees has moved things in that direction. Many people have come to expect that.
But as the Daily Beast's Megan McArdle commented, "Coverage of routine, predictable services is not insurance at all; it's a spectacularly inefficient prepayment plan."
Some Obamacare architects, including its namesake, want to move toward a single-payer system in which government would pay all health care costs.
Many Obamacare opponents want a bigger role for markets, allowing consumers to choose insurance that covers catastrophes and paying for routine costs with tax-free (and in some cases subsidized) dollars.
But if large numbers of employees are enrolled in "skinny" health insurance plans, as the Wall Street Journal article suggests, Obamacare will have produced an unanticipated outcome no one wants.
People stuck with these policies will have insurance that pays for the equivalent of oil changes (up to six a year!) but not for the equivalent of wrecked car. Just the opposite of real insurance.
I think the bigger question is....why is anyone shocked? Most people who said they had a four-star health plan back in 2008...will wake up in 2016, and say that they have a two-star plan, and feel they are worse off now than when this all started. And? Why should anyone feel this way? It was written down, and various analysts projected this.
That's unexpected. Who could have guessed that business owners ordered to run their business in a manner that they would not otherwise have chosen would make the decisions that are least harmful to their business rather than the decisions wanted by a petty bureaucrat in our White House?
Let’s put THE GOVERNMENT in charge of your health care! What could go wrong.
You might be wondering what a "skinny" or "low-benefit" insurance plan is. The terms may vary, but the basic idea is that policies would cover preventive care, a limited number of doctor visits and perhaps generic drugs. They wouldn't cover things such as surgery, hospital stays or prenatal care. That sounds similar to an auto insurance policy that reimburses you when you change the oil but not when your car gets totaled.
That's exactly right. This type of "insurance" isn't really insurance at all. It's like a pre-paid auto maintenance plan.
An insurance policy that does not cover surgery or hospital stay’s is worse than useless.
One surgery and stay in the hospital and most of us would lose our homes.
Let me repeat that ONE SURGERY AND STAY IN THE HOSPITAL AND MOST OF US WOULD LOSE OUR HOMES.
That is no wild speculation there, it is fact.
Not many of us could stand a $100,000 dollar stay in the hospital and surgery of another $50,000 and be able to pay it off. $150,000 is a cheap stay.
A couple at 30 years old has a child with Appendicitis , and they are ruined for years and years trying to pay it off.
Obamacare has done us no favors. It will ruin us.
We must be rid of this horrible law.
One very positive impact of Obamacare is that it is likely to bring about the end of one particularly idiotic feature of the U.S. economy: the expectation that employers are somehow obligated to pay their employees' bills for them.
We must be rid of this horrible law.”
The quickest way to get rid of it would be to have it cover ALL Federal employees with the requirement that they pay 70% of the cost of their premium out of their own earnings with no HSA.
I am no kid, I have paid for insurance all of my life BC&BS, and I doubt if BC&BS will survive Obamacare.
The whole thing is designed to kill off Insurance Companies and place you under the Government.
There will be a few years where Insurance companies will struggle to survive, but in the end they will all fold,IMO.
This one is recent news to me,
while Obama-care mandates all these preventative services (like birth control and breast-xrays) it doesnt seem to mandate that the health insurance policies actually pay the medical bills when you get sick.
So as the article says, business-wise companies like Walmarts who hire low-skill workers have an incentive to just offer prevention bills to full time workers to not get the fine.
That’s why I have catastrophic insurance with a high deductible.
When you triple the premiums, employers will make up for that by offering a plan one third as good.
Government creates massive distortions in the health insurance industry just like it’s distorting the market elsewhere.
Home owners insurance offers an excellent comparison. I can choose low or high deductible policies and everything in between. The high deductible policies can be considerably less expensive and make more sense if one has enough saved to cover the deductible. The low deductible policies are usually much more expensive and may be better for those who cannot pay a large deductible but can afford higher monthly payments. It’s wise, I think, to move from low to high deductible plans as soon as possible.
The administrative costs that come with insurance claims make low deductible plans less cost effective. I don’t know if any companies even offer zero deductible home owners plans. If so, they’re probably very expensive.
Health insurance, in an undistorted market, would probably be more like home insurance. Most people would likely opt for catastrophic coverage and prefer to pay routine expenses out of pocket. That would make the most economic sense, just like in home owners plans, because the administrative costs of filing claims for such things as aspirin or bandages would drive up their costs tremendously.
Locally there is a major battle involving multiple BC BS and hospital full page newspaper ads. BC BS removed the hospital from the list of providers because it would not accept the payment schedule.
Both sides are appealing to the insured via the full page ads.
It is a mortal fight for BC BS already
Wow, you learn something new every day. So Walmart could provide their folks with these low-benefit policies, while a mom-and-pop store on the corner is required to pay for the Cadillac Plan that includes a full suite of mental health services and birth control.
It’s a virtual “grind your smaller competitors into the dust” program. No wonder Walmart seems to be sucking-up to Obama so much these days.
Doesn’t everyone?
Welcome to the club!
They will never admit it.
The low-skilled are usually the low-information voters too, and they have no knowledge of what this article is saying.
I don’t think the insurance agents around the country made Obamacare an issue in 2010, or did I miss that?
This is just the tip of the iceberg. Here, as succinctly as I can put it, is what the company I work for is doing. We are a broker and third party administrator so we do this...
1. Approx %80 of the US work force works for small business which are those with less than 100 employees.
2. If a business does NOT offer and “affordable” health care plan they must pay a fine. This fine varies but is easily 100k+ for a small business.
3. HOWEVER, if you offer a plan and the plan is denied by the insurance carrier then the business is EXEMPT from the fines.
So we are charging companies about 20k to design a cheap ass plan that covers almost nothing. Then we take it to the employees and out of 150 employees maybe only 15 or so elect coverage. Then we take it to the market (insurance carriers) for pricing and the carriers deny it because of participation rates and Bada Bing your exempt from the PPACA penalties and you are subsidizing an expensive health care plan...
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