Wednesday, June 09, 2010

Are Mini-Meds on the Chopping Block?

The lies that comprise ObamaCare© continue to pile up. As we've noted before, one of the first to go is the promise that one can keep one's current plan:

"As with so much of ObamaCare©, this one's going under the bus, as well ... savvy folks will avoid buying major medical insurance altogether, opting instead for the much less expensive "penalty" (i.e. "tax"), secure in the knowledge that they can easily pick up coverage later."

Now comes word that folks on limited benefit (aka "mini-med") plans may also see their plans tossed under the bus:

"If you have a low premium, low cost insurance plan, you are going to lose your coverage and be forced into a much higher-cost plan. The Politico piece specifically finds this problem in the mini-med market, where as many as 1 million people will lose their coverage under Obamacare."

The problem is that under the new law, the internal benefit caps inherent in the mini-med product will become illegal. So the plans will have to either adjust (meaning: delete the caps and increase premiums dramatically) or bail. If the latter, a lot of folks who either can't qualify for or can't afford "regular" major medical insurance will find themselves in dire straits:

It's estimated that some 1 million people currently own one of these plans; many of them have no other choice. ObamaCare©'s guaranteed issue provision doesn't kick in for another three-and-a-half years, and - as Bob has pointed out - the ObamaPools are (at least so far) non-starters. If and/or when they actually do become available, a lot of people on the low-end of the economic spectrum may find them unaffordable (especially as compared to their current premiums), thus adding to the ranks of the uninsured.

But, as with the nHealth kerfluffle, there may be less here than meets the eye:

According to John Ferguson, an expert on limited-benefit plans (and whose company has been marketing them for a number of years), the folks playing Chicken Little may be premature. John points out that, as far as mini-meds are concerned, "everything is an opinion now ... [and we] believe we are filed in all the right ways to stay in the market."

How can he be so sure?

Glad you asked:

John explains that "[w]ithin the limited medical industry there are two styles of limited medical benefit plans: co-insurance (sometimes referred to as co-pay-based or expense-incurred) and indemnity-based (sometimes called fixed indemnity) insurance. Fixed-indemnity-style limited medical plans that do not issue creditable coverage letters or represent themselves as a “true group health insurance plan” are exempt from the new regulations because they are considered supplemental-insurance-based limited medical plans." The plans based on the co-insurance model, however, will most likely be the ones headed out the door. At this point, of course, no one knows how many of each type are in force, so there's no way to gauge the ultimate impact.

[Full disclosure: I use John's company for my mini-med clients]

Regardless, I have no doubt that at least a few folks, and perhaps many, will lose their existing coverage as a result of these changes. And so another ObamaCare© promise bites the dust, but that's hardly a surprise.

[Hat Tip: FoIB Brian D]
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