Wednesday, March 12, 2014

Obamacare's Race to the Bottom: ‘Skinny plans’ Gain Traction As Necessary PPACA Evil

'Skinny plans' are a new flavor of group health plans – generally designed to replace what used to be called 'Mini-med' plans – that provide very basic medical care, but do not satisfy the 60% "minimum value threshold" under the health care reform law.  Despite that, they appear to be legal, at least for now - stay tuned as change-on-the-fly is more common that adherence to law at this point.  
  • Minimum value threshold means that the plan covers 60% of anticipated medical costs.  In the Exchanges these are called "bronze plans."   
  • Minimum essential coverage refers to a list of 10 required benefits (generally preventive and wellness-style benefits) mandated in individual and small group plans.  Large employers of more than 50 employees in California may offer a subset of these 10 mandated benefits.  

Providing employees with “minimum essential coverage,” (as opposed to minimum value coverage) as mandated by PPACA, means the health plan will include the 10 essential benefits outlined under the law.  However, PPACA regulations only require carriers to offer those 10 benefits in plans sold in the individual or small-group markets.  Companies with 50 or more full-time employers are not required to provide workers with this more-generous list of protections. Although still referred to as “minimum essential coverage,” large employers only need offer workers a subset of preventive services akin to a glorified wellness plan. These newly spawned 'Skinny plans' are only costing between $50 and $100 per employee per month. 

With a 'Skinny plan' a large (over 50 in California) employer can offer a very minimalistic wellness-only style of benefit and avoid the $2,000 per employee PPACA penalty.  It would not, however, avoid the $3,000 per employee penalty for those employees who go into Exchanges and receive a subsidy. The thought is, many folks won't bother going into the Exchanges and the employer will avoid most penalties.  

This is a perfectly classic illustration of government intervention making things markedly worse.  All that the industry is doing here is replacing one kind of existing "Mini-med' plans with even less robust 'Skinny plans' - many mini-med had a limited hospital benefit while most Skinny plans do not.  So now we, as a society, are burning thousands of hours of time, money and resources to create these new, lesser-than-a-mini-med plans to skirt the largest sledgehammer within Obamacare. 

This is from Bruce Jacobs at Benefits Pro (Hat Tip - Ryan Kennedy):
While a typical “skinny plan” may offer preventive services such a wellness element, a few doctor visits per year, and generic drugs, for example, it doesn’t provide arguably the most important element of any medical coverage: payments for surgery and hospitalization. Under a “skinny plan,” if your Pinto gets rear-ended and you land in the hospital and need an operation or two, financially, you are on your own. 
Regardless, these plans are permitted under PPACA regulations. ... 
See also on 'Skinny Plans':