New regulations issued by the Centers for Medicare & Medicaid Services are accelerating the demise of so-called “mini-med” health care insurance plans by eliminating a waiver program the plans needed to survive regulations within President Obama’s health care law.
Under mini-med health insurance plans, a person takes out a health insurance policy that covers routine and inexpensive health care needs but not catastrophic care. Obama’s law forces all health insurance plans in America to offer a minimum of at least $750,000 in annual coverage, which is then bumped up to $2 million in 2013. Mini-med plans, however, typically provide much lower health insurance coverage, in the thousands or tens of thousands range.
The coverage mandates would force mini-med plan premiums to skyrocket, so these plans have been allowed to seek waivers from Obamacare. But most of these waivers expire at the end of 2013, and the newly issued CMS regulations mandate a cutoff point of September 2011, after which current mini-med plans will no longer be allowed to apply for a waiver.
Poor Will Lose Plans
Mini-med insurance policies are currently used by more than 3 million Americans, typically poor and hourly paid workers who cannot afford to pay the premiums for more expensive health insurance policies. According to Kevin Wrege, regional director of state affairs at the Council for Affordable Health Insurance, Americans can expect one final burst of new “mini-med” offerings before 2014.
“There is likely to be a pipeline for new products coming into the mini-med space, because they are not really going to be viable products from 2014 on,” Wrege explains. “Those who are in a position to seek a waiver have already sought it probably, and the Obama administration is simply drawing a line here, beginning September 2011 for applications.
“For whatever reason, the administration is saying, ‘We are not going to entertain any more new ones from September 2011 on,'” Wrege said.
Premium Hikes Could Kill Market
Joe Antos, a health care policy expert at the American Enterprise Institute, says the announcement is an admission of Obamacare’s premium-hiking effect.
“The administration is admitting that plans with low limits would see sizable increases in premiums without the waivers. The waiver puts this off to 2014, when the big increase will drive workers in affected plans to the exchange,” Antos said. “For big firms with limits that are close to the requirement, you could see small increases in premiums, but not in the firms that most need waivers, where the impact will be dramatic.”
Antos says CMS’s September 2011 cut-off date is an arbitrary timeframe, which reveals further troubles ahead for implementation at the national level.
“I have no idea why they are closing off waiver applications so soon. Maybe this is taking up time they need for other implementation,” Antos said. “This is a bellwether moment for how the administration will handle other problems that affect more people. This incident demonstrates the administration’s lack of transparency and general reluctance to deal with the serious problems caused by poorly formulated policy.”
Political Motives Seen
Dr. John Graham at the Pacific Research Institute maintains the sudden manner in which CMS issued this announcement has political motives attached to it.
“The continuous rollout of waivers is becoming embarrassing to the administration. It needs to delay implementation of the 2009 PPACA so that people do not experience the harm it will cause to their access to health care until after the 2012 election,” Graham said. “Therefore, they have unilaterally and arbitrarily decided to get all the rest of the waivers out of the way in one fell swoop, so that observers will have forgotten about them by the time the [next election] campaign gets into full swing.”
Wrege says the mini-med market in America is effectively dead—except for those plans that got their waiver from CMS.
“There is no love lost between advocates for total universal coverage in America and mini-med plans. Those advocates have not embraced the notion to not let the perfect be the enemy of the good with these products,” Wrege said. “Millions of workers have decided to use these plans for a degree of protection. But in a top-down decision-making process, where innovations are discouraged or prohibited, more standardized plans are going to be the norm.
“So for part-time workers, skilled or unskilled workers, or working families that do not have the opportunities to purchase a major policy, the option of these ‘mini-med’ plans is now set to be no longer available in marketplace, and to eventually go away entirely,” he said.
Ed Haislmaier, senior research fellow for health policy studies at the Heritage Foundation, stresses this is yet another example of an unexpected element of the health care law, saying it “only looks more and more like the junior staff at Capitol Hill wrote it.”
“This is essentially a policy decision by those who think it is better that some Americans have no health insurance plan than have a health insurance plan [Obama’s policy designers] deem inadequate. It is akin to the minimum wage debate: Better the American has no job, than be paid below the minimum wage,” Haislmaier said. “They did not anticipate this problem with mini-med plans, and now they’re facing a situation where millions of Americans will lose the health coverage they had.”
“This is one more screw-up in a piece of aspirational legislation,” Haislmaier concluded.
Thomas Cheplick ([email protected]) writes from Cambridge, Massachusetts.