Skinny health coverage doesn't mean you get fit. It means that your health insurance may give you free office visits but will leave you holding the tab if you get really sick.
Major employers are considering offering this kind of coverage to employees in response to mandates in the Affordable Care Act, The Wall Street Journal has noted, especially in low-wage industries. The trick, it seems, is that the law requires certain minimums at the routine end, but for large companies does not require things like X-rays and hospital coverage.
It's probably not what the designers of the new health care law had in mind, but Rep. Nancy Pelosi (D-Calif.) did infamously say, "We have to pass the bill so that you can find out what is in it."
The Wall Street Journal report notes that a "close reading of the rules makes it clear that those mandates affect only plans sponsored by insurers that are sold to small businesses and individuals, federal officials confirm. That affects only about 30 million of the more than 160 million people with private insurance, including 19 million people covered by employers, according to a Citigroup Inc. report. Larger employers, generally with more than 50 workers, need cover only preventive services, without a lifetime or annual dollar-value limit, in order to avoid the across-the-workforce penalty."
"The problem here is that Obamacare's architects seem to misunderstand the concept of insurance," wrote syndicated columnist Michael Barone. "People buy insurance to pay for low-probability, high-cost and undesirable events. It doesn't make sense to hold on to enough cash to replace your house if it burns when you can buy an insurance policy that will cover that unlikely disaster."
At the heart of this paradox is an almost complete disconnect among key players as to what "insurance" actually means, argued Megan McArdle at The Daily Beast in March.
McArdle pointed to a comment by Health and Human Services Secretary Kathleen Sebelius at a White House press briefing, where Sebelius argued that catastrophic insurance was not really insurance at all.
"Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus," Sebelius had said. "They're really mortgage protection, not health insurance."
This, McArdle argued, gets it entirely backward. "Catastrophic coverage is 'true insurance'," McArdle wrote. "Coverage of routine, predictable services is not insurance at all; it's a spectacularly inefficient prepayment plan."
Sebelius was respondingng to a report from the American Society of Actuaries, which McArdle noted, projected that "premiums are going to rise by 32 percent when Obamacare kicks in, as coverage gets more generous and more sick people join the insurance market."
Eric Schulzke writes on national politics for the Deseret News. He can be contacted at firstname.lastname@example.org.
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