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The Center for Public Integrity: The false promise and big profits of 'mini-med' health plans

Author: Wendell Potter
March 28, 2011

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In 2014 "mini-meds" or health care policies that feature high deductibles, modest benefits and low annual caps on medical coverage will be banned. Wendell Potter analyzes how many large insurance companies are securing wavers  to continue providing the heavily contested, but highly profitable policies.

One of the reasons I left my job as a PR executive for the health insurance industry was because I could not in good conscience be a pitchman for the sort of fabulously profitable benefit plan that often provides little more than the illusion of coverage.

Known as “mini-meds,” these plans have become popular among businesses like fast-food chains that have many low-wage employees. The common features of these plans: high deductibles, modest benefits and low annual caps on medical coverage. Some of these plans provide as little as $2,000 worth of care each year.

Consumer advocates call these plans “junk insurance.” That's because what workers get in these plans for their hard-earned money may actually put them at risk of going bankrupt or losing their homes if they get seriously sick or injured.

My view is that these mini-med plans should be illegal — and they will be in 2014, thanks to the health care reform law. They would disappear even sooner if employers and insurance companies that sell these plans had to comply with a provision of the law already in effect that requires them to provide at least $750,000 in medical coverage annually. Trouble is, many insurance firms and employers are squirming their way out of complying with that provision.

They're doing so with a time-honored form of sabre-rattling. Many employers that offer mini-meds — most notably McDonald's — say they will stop doing so if they have to meet the annual limit this year because adequate coverage would cost them more money. McDonalds, by the way, is a $79 billion company that makes a tidy profit. Most Wall Street analysts who cover the fast-food industry recommend to investors that they buy the company's stock, and for good reason. Last year, according to Yahoo! Finance, McDonald's profit margin was 20.55 percent, and its return on equity was almost 35 percent.

But the threats seem to be working. The Obama administration is worried that many Americans would be dumped into the ranks of the uninsured if it doesn't offer temporary exemptions from that $750,000 annual cap. So the administration has been granting waivers of that provision to hundreds of employers, insurers and even unions that provide benefits to members. Republicans and other critics of “Obamacare” have cited the number of waivers as evidence that the law isn't working.

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