Banning low-cost plans

A number of you are emailing me about the Politico article on low-cost health care plans:

Part of the health care overhaul due to kick in this September could strip more than 1 million people of their insurance coverage, violating a key goal of President Barack Obama’s reforms.

Under the provision, insurance companies will no longer be able to apply broad annual caps on the amount of money they pay out on health policies. Employer groups say the ban could essentially wipe out a niche insurance market that many part-time workers and retail and restaurant employees have come to rely on.

I’ve never been an ACA apologist.  This is entirely true.  But the why is just as important as the what here:

This market’s limited-benefit plans, also called mini-med plans, are priced low because they can, among other things, restrict the number of covered doctor visits or impose a maximum on insurance payouts in a year. The plans are commonly offered by retail or restaurant companies to low-wage workers who cannot afford more expensive, comprehensive coverage.

Depending on how strictly the administration implements the provision, the ban could in effect outlaw the plans or make them so restrictive that insurance companies would raise rates to the point they become unaffordable.

Look, the ACA doesn’t ban low-cost plans.  It sets no minimums on what a plan can cost.  It does, however, set minimums on what a plan can cover.  It does ban low-benefit plans.  It just so happens that low-benefit plans are also usually low-cost.

There are a host of health insurance plans out there that are cheap.  It’s just that the majority of those also are crappy.  Sure, they’re great if you’re healthy.  They only stink when you get sick; but that’s when you need them.

One of the things the ACA does is try and eliminate under-insurance.  It tries to regulate the insurance companies so that you can’t get sold a plan that provides too little coverage when you need that.  That costs money.

The companies that are complaining about this were giving their employees skimpy insurance.  They are upset that they won’t be able to do so in the future.  They’re also upset that real insurance will cost more.

This is America; they’re allowed to be upset, and they’re allowed to complain.  I just don’t have a lot of sympathy for them.

P.S. More robust reform would have eliminated issues like this, but you didn’t want that, America.  Deal with it.

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