On Friday, Talking Points Memo reported that a company named USHealth Group is actively encouraging consumers to buy individual health plans outside of Obamacare’s marketplaces that provide shoddy benefits, don’t qualify for federal subsidies, and won’t even meet the Affordable Care Act’s minimum coverage requirement. Since that doesn’t fulfill the individual mandate, consumers with those plans would still have to pay a tax penalty under Obamacare.
Ultimately, it’s part of a larger trend of insurers using general confusion over the health law to hawk substandard plans that do little to protect consumers if they get sick or need extensive medical treatment.
The company at the heart of TMP’s investigation has been insisting that Americans don’t need the benefits levels required of policies sold through the Obamacare marketplaces, and that USHealth Group’s plans are more affordable than marketplace plans even when taking the tax penalty for lacking sufficient coverage into account.
But these plans aren’t really health “insurance” in any real sense of the word. Many of them come with low annual and lifetime caps on the amount of care they’ll pay for, meaning consumers with such plans may as well be uninsured if they suffer a catastrophic illness or accident. More than 60 percent of U.S. bankruptcies are over high medical bills, and a full three-quarters of these Americans who go bankrupt over health care costs actually had private insurance when they got sick.
Other insurance companies are also trying out creative ways to bypass Obamacare’s consumer protections and benefit requirements while consumers remain confused about reform. For instance, Arkansas Blue Cross Blue Shield has been offering a policy called the Essential Blue Freedom Plan. BCBS has been promoting this policy as “full coverage” plan that has “benefits that are not dictated by the new health care law,” according to Georgetown University’s Center on Health Insurance Reforms blog. That makes the plan cheaper from a premium perspective, but it also comes with a $1 million lifetime cap, severely limit mental health benefits, and doesn’t even cover maternity care.
BCBS only gets away with selling this policy because the company offers it as a so-called “limited duration plans.” These plans are meant to, as the name implies, offer temporary and transitional coverage. But BCBS is selling Essential Blue Freedom as a 364-day plan. That technically meets the definition of “limited duration” but is an obvious distortion of such policies’ original intent. Customers who buy this plan would also have to pay Obamacare’s tax penalty for having insufficient coverage.