Health Insurers backing cheap plans with inadequate coverage

[eridani]

http://www.ahip.org/News/Press-Room/2014/Policy-Solutions/

While millions of Americans have the peace of mind that health insurance provides, more can be done to maximize choice and affordability for individuals and families. As a solution to bring more families into the marketplace:

Health plans support the creation of a new, lower-premium catastrophic plan.

Such a plan would offer consumers the option of coverage that has lower monthly premiums but still provides the comfort of knowing that their costs will be limited in the event of a serious illness or injury.

<snip>

We believe a new catastrophic plan would further the public policy goal of affordability and call upon policymakers to expand consumer choices by allowing this lower-premium option to be offered.

Comment by Don McCanne of PNHP:

One of the worst failures of the Affordable Care Act (ACA) is that, even with subsidies, the premiums and out-of-pocket expenses are unaffordable for far too many people. AHIP now proposes to make the premiums slightly more affordable by offering catastrophic plans with very high deductibles that would make accessing health care truly unaffordable for even more people (cost sharing subsidies are available only for silver plans, but coverage of the proposed catastrophic plans would fall even below the lowest-level bronze plans).

Why would they do this? Could it be that they want to capture a portion of the market of the 31 million people who will still remain uninsured after ACA is fully implemented?

Who would actually select these plans with very high deductibles but lower premiums? Those with very low incomes who would struggle even with subsidized premiums might choose these plans if they consider their subsidized premiums to be “all that they can afford.” These are individuals who would be much more likely to forgo essential health care simply because they couldn’t afford their portion of the deductibles.

Very high income individuals might select these plans to insure against catastrophic losses while deciding to self insure against more modest medical costs. The problem with this is that this is a form of regressive financing of the insurance risk pools. Since average health care costs are well beyond the means of middle income families to pay for them, wealthier individuals need to contribute more to the collective insurance pools (as they would in a single payer financing system). The AHIP proposal for low-premium catastrophic plans would allow them to contribute less than average instead.

For healthy middle-income families there is a preference for the tradeoff of lower premiums for higher-deductibles - an observation confirmed by behavior in the individual insurance market before the enactment of ACA.Families that remain healthy will come out ahead, but those families that later face significant health problems often find that they will face severe financial hardship as well - even bankruptcy.

So the insurance industry is taking a position that they can increase their market, that they will not have to pay for routine medical expenses, and that they can lower their medical losses by paying only for the comparatively few individuals with high medical expenses. Little does it matter that they have the health coverage function backwards in that the healthy and wealthy do very well but the sick and poor suffer. Limiting essential protection for the most vulnerable demonstrates again why the private insurance industry should be dismissed.

The insurance industry has been very successful in getting innovations that benefit themselves. This release by AHIP suggests that this is the beginning of another self-serving public campaign - this time to allow individuals to have (in marketing terms) "the choice of purchasing only the insurance they need” - a high-deductible catastrophic health plan.

Social solidarity takes another beating.

[frazzled]

1. These plans are only available to a limited set of qualifying individuals

Catastrophic plans may only be offered to individuals who:

are under age 30 before the plan year begins, OR
Have received a certification from an Exchange that they are exempt from the individual mandate because they do not have an affordable coverage option or because they qualify for a hardship exemption

http://www.bcbsm.com/content/microsites/health-care-reform/en/reform-alerts/cms-issues-proposed-rule-catastrophic-plans.html

The plans are for very young people who don't anticipate medical costs, but in case they get hit by a bus or come down with some major major thing, will be responsible only for the out-of-pocket maximum of $6,400. It's what we used to call "major medical."

But no, healthy middle-income people or high-income individuals do not qualify to buy these plans.

In addition, for marketplace plans (only):

In the Marketplace, catastrophic plans cover 3 primary care visits per year at no cost, even before you’ve met your deductible. They also cover free preventive services.

https://www.healthcare.gov/can-i-buy-a-catastrophic-plan/

These plans are for the very young (and healthy) or for people who have fallen through the cracks.

[eridani]

2. The AHIP article is about insurers demanding more concessions from ACA

It is not about what is in the ACA now.

Furthermore, any encouragement of healthy people skipping as much funding of health care as they can get by with is advocating mass murder of sick people. It cancels the very idea of shared risk. The purpose of health insurance is risk spreading, that is forcing the 85% who account for only 15% of health care costs to pay the bills of the 15% who account for 85% of costs. If you think this is bad, why aren't you advocating for every property owner who has not had a fire to stop paying property taxes to fund the fire department?

[MisterP]

3. they kept saying it was "half a loaf," but it's more like "half a puppy"

not at ALL half as good as a puppy, IOW

[woo me with science]

4. Enough is enough.

More civilized nations manage to provide basic health care to their citizens.

We drown in corruption and excuses, and there is no excuse for it.

Get rid of the corrupt middlemen and make Medicare for everyone.

[woo me with science]

5. kick