Insurers, Employers Threaten to Drop Low-Benefit Employee Insurance If $750,000 Annual Benefit Limit Is Enforced
WASHINGTON, Sept. 2 /PRNewswire-USNewswire/ -- Americans were promised meaningful health benefits under health reform and deserve better than the near-worthless junk insurance that low-wage employers are lobbying to preserve, said Consumer Watchdog. The group urged President Obama to resist making wholesale exemptions to the new law.
In a letter sent today to the White House, Consumer Watchdog asked the president not to exempt limited benefit insurance plans from the health reform requirement of at least a $750,000 annual maximum of coverage by next year. The limited plans, also known as "mini-meds," are often the only insurance available to temporary, part-time and low-wage retail or fast food employees.
"Some of these 'mini-med' policies are capped at a few thousand dollars of coverage per year, hardly enough to pay for a brief emergency room visit or one night of hospitalization," said Judy Dugan, research director of Consumer Watchdog. "Yet because they are defined as health insurance, workers who accept these junk policies may be excluded from public benefits or hospital charity aid if they fall seriously ill."
Consumer Watchdog urged the administration to allow only case-by-case exemptions, and require employers to disclose the policies they offer and the economic data showing they cannot afford better health insurance.
"If corporate lobbies win this round with their blackmail-style threats, they will be back with a laundry list of even bigger demands," said Dugan. "The insurance industry sees this as an easy win that will open loopholes it can widen later."
Consumer Watchdog's letter to the White House said:
"We see insurers' threats to exit whole markets, and employers' threats to simply quit offering insurance, if a $750,000 minimum annual benefit cap is enforced as a test of your administration--one that will determine future corporate lobbying strategies in Washington and statehouses. We understand what is at stake: your promise in an election year that Americans can keep the insurance they have. But mini-med is not insurance as most middle-class people understand it.
"This lobbying battle can be an opportunity to expose the high-profit mini-med market for the deception that it is, while still offering exemptions on an employer-by-employer basis. ...
"A blanket exemption, far from saving employee health insurance, will encourage more employers to degrade coverage, even outside low-wage industries. A significant exemption will also be a foundation for the Chamber [of Commerce] and the insurance industry to demand more and greater concessions on rate reviews, rate disclosure and even the ban on lifetime coverage limitations.
Read the whole letter at http://www.consumerwatchdog.org/resources/minimedWhiteHouseletter090210.pdf
Reports of heavy lobbying on limited benefit plans came up in conversations at the recent summer meeting of the National Association of Insurance Commissioners, as well as on health Web sites.
Employers such as Wal-Mart, Lowe's, large clothing retailers and service industries including hairdressers and restaurants either sell or offer the cheap mini-med insurance to some or all employees. Business groups have threatened to drop coverage, and insurers have threatened to cancel policies, if they do not get blanket exemptions from the reform law's benefit requirements.
Employers argue that the mini-med policies are better than no insurance, but because employees don't understand how bad the insurance is, they may receive tens of thousands of dollars in bills before realizing they're not covered, said Consumer Watchdog.
"Only standing up to these special-interest lobbying demands now will prevent greater degradation of the health reform law that is a signature achievement of your presidency," said the letter to Obama.
Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org
SOURCE Consumer Watchdog