(Washington, DC) A new insurance company initiative to provide barebones coverage policies would do little to protect consumers who become ill and could possibly erode employer-sponsored coverage as we know it, according to the national health care consumer group Families USA.
The new health plans, proposed by Aetna, Inc., and called Affordable Health Choices, would offer only modest benefits. For example, one plan being offered would pay for up to six doctor visits a year and $500 a day for the first three days in the hospital and less for subsequent days. The health plans would be exempt from state mandates.
"The insurance industry should be required to put a disclaimer on their advertising for these plans: If you purchase one of these plans, don't get sick," said Ron Pollack, Executive Director of Families USA. "This kind of coverage won't make a dent in your health care bills in the event of a serious illness. Five-hundred dollars a day in the hospital may pay for a box of tissues, one x-ray and one visit by a nurse."
While the company claims the initiative will help millions of uninsured people afford health care coverage, studies have shown that very few people avail themselves of barebones policies recognizing that they do little to provide coverage and include steep out-of-pocket costs.
"These plans provide insurance that doesn't insure they don't cover you when you are sick and they leave you with massive bills to pay," said Pollack. "What these plans may do is give businesses an excuse to reduce or eliminate health care coverage for their employees."
In the early 1990s a number of states enacted legislation that waived some or all of their mandated benefits and allowed health plans to offer barebones coverage that provided only minimal benefits. In 1993 Families USA did an analysis of these plans and found that, in 16 states that had at least six months market experience with barbones plans, these plans did not significantly expand coverage to the uninsured. In eleven of these states, fewer than 300 people were enrolled.
"Arguing that these plans are a solution to the problems of the uninsured is like arguing that giving students brand new pencils will fix the problems of quality education in this country," added Pollack.
What the insurance industry has said about barebones coverage:
Group Health Association of America, now the American Association of Health Plans
"Ultimately this [a barebones package] is not cost effective, and it also impacts on the quality of care received by patients." James F. Doherty, "Statement on the Issue of Standardized Benefits." Testimony before the Subcommittee on Health, Committee on Ways and Means, U.S. House of Representatives (Washington, DC: Group Health Association of America). March 30, 1993
"Leslie Rose, legislative director for GHAA says that if a uniform benefits package is to be effective, it must be comprehensive. 'If you make the plan barebones, it won't be cost effective because it will leave things out,' she says." Medicine and Health, vol. 47/No.14/March 29, 1993.
Health Insurance Association of America
"HIAA believes that the essential benefit package should not be a 'bare bones' or stripped-down insurance package." Mary Deckert, "Statement of HIAA on the Essential Benefits Package." Testimony before the Subcommittee on Health, Committee on Ways and Means, U.S. House of Representatives (Washington, DC: Health Insurance Association of America). March 30, 1993
"The solution has to be greater than this little piece of the puzzle." Chris Peterson, Senior Counsel for the Health Insurance Association of America, "Movement to Sell Basic Health Plan is Found Faltering", New York Times, November 10, 1991.
Association of Private Pension and Welfare Plans
"One test for the adequacy of the package was, would we feel comfortable having our own families covered by such a plan? We therefore rejected out of hand so-called 'bare bones' benefit packages as inadequate." -- "Statement of the Association of Private Pension and Welfare Plans on Health Care Reform: Consideration of Benefits for Inclusion in a Standard Health Benefit Package." Testimony before the Subcommittee on Health, Committee on Ways and Means, U.S. House of Representatives (Washington, DC: the Association of Private Pension and Welfare Plans). March 30, 1993.
Blue Cross Blue Shield Association
"Such policies are no substitute for comprehensive reforms to address the problems of health care access and cost management." Susan Laudicina, Impact of State Basic Benefit Laws on the Uninsured, the Blue Cross Blue Shield Association, December 1992.
