Mini-Meds For Maxi Greed

Dan Munro

Posted 2/10/12 on Forbes 

Within a certain part of Italy that mints its own coins and has a standing army outfitted in designer togs from Michelangelo, when one makes a mistake, the correct and only exclamation is Mea Culpa.  Well actually it’s more like Mea Culpa, Mea Culpa, Mea Maxima Culpa – but even Italians are known to abbreviate their Latin for the sake of expediency.  That’s my mantra this week after last weeks post on Medical Gluttony.  In that article we highlighted a new book by Dr. Otis Webb Brawley – How We Do Harm – in which he characterized portions of our healthcare delivery system as gluttonous.   In all fairness, doctors and providers are most definitely not alone in their greed.  I never said they were – but I tend to err on the Italian side of life when it comes to my public Mea Culpas.

This week it’s time to turn our attention to another form of healthcare malfeasance – a form of Payer Gluttony.  By the time we’re done with our mini series on gluttony, we’ll likely get to include Pharma Gluttony, Political Gluttony and possibly some other gluttony’s as yet to be uncovered.  It’s no wonder our system is $3 trillion per year and represents 18% of GDP.  In their landmark study from 2008 – The Price of Excess – PWC estimated that roughly half of our healthcare spending is completely wasted.  The real question remains – is it truly wasted – or is this just the biggest trough America has ever built?

Like most of healthcare’s really sad tales, this one isn’t new – and it’s certainly not the most egregious payer offense – but it is among the most blatant. Simply put, it’s a form of healthcare insurance that really isn’t.  Earlier this week – Consumer Reports revisited the issue of an entire range of products with names like Mini-Meds, Discount Health Cards and Fixed Benefit Indemnity plans.  In theory, the idea has always been to provide somehealthcare coverage, however limited, to those who couldn’t afford either a high-deductible health plan  – or catastrophic only coverage.  In reality, the practice includes some of the biggest names in the Health Insurance business – including Cigna, Aetna and Allstate.  There is also an entire roster of late night TV ads pushing products like “A Real Healthcare Plan Starting As Little As 25 Cents a Day” from a company called HealthcareOne. It was estimated that HealthcareOne was taking in about $500,000 to $600,000 per month – before regulators finally shut it down.

Sample – Fixed Benefit Indemnity Plan

In most cases, especially the discount health cards, the benefits were either a small fraction of anything that could be considered useful – or simply non-existent.   One lady signed up in order to get a “free flu shot.”  Eighteen months later – after $1,717 in payments the only activity on her account was a single denied claim – for the flu shot.  In fact, fixed benefit indemnity plans aren’t even considered an insurance product – so they are not subject to the healthcare reform legislation.  Most of these products are being peddled to temp or service sector workers – and it’s often highlighted as an employee “benefit” by large retailers and food service employers at some of the nations largest chains – including McDonalds. The current estimate is that about 3.9 million people are enrolled under these various plans. Consumer Reports went as far as to call the entire group of products “junk” and recommends avoiding them altogether.  Their first suggestion on how to avoid them? “Don’t shop from a search engine.”

From the Consumer Reports article – here is a list of the 4 companies with the largest number of enrolled members – and their response as to why they provide these plans:

Largest mini-med sellers

  • Cigna Starbridge 265,000 enrollees. “Policies are offered to … workers who typically are not eligible for any other employer sponsored-group health coverage.”
  • Aetna SRC 209,423 enrollees. “It’s still some coverage for people who may not have any other options.”
  • BCS Insurance 115,000 enrollees, including McDonald’s hourly employees. “It’s a matter of affordability.  These are largely part-time and hourly workers.”
  • American Heritage Life Insurance Co. (Allstate) 69,945 enrollees.“Employers … wanted to provide a more affordable voluntary benefit option to their … lower-wage employees.”

PPACA – the “sweeping” healthcare reform legislation that was enacted in 2010 specifically banned these products outright, but of course at this trough the word “ban” is unacceptable so waivers were quickly requested and just as quickly granted (effective until 2014).  As of last month, there were 1,231 waivers issued, and there are 50 companies alone that offer mini-med products.

Unfortunately, healthcare news doesn’t always have to be breaking to warrant coverage.  In this case – it certainly doesn’t qualify as breaking – but it absolutely warrants the added coverage.

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