Would you like to have a skinny health insurance policy? Probably not. But if youre employed by a large company you may get one thanks to Obamacare.
Thats the conclusion of Wall Street Journal reporters Christopher Weaver and Anna Wilde Mathews. They report that insurance brokers are pitching and selling low-benefit policies across the country.
You might be wondering what a skinny or low-benefit insurance plan is. The terms may vary but the basic idea is that policies would cover preventive care a limited number of doctor visits and perhaps generic drugs.
They wouldnt cover things such as surgery hospital stays or prenatal care. That sounds similar to an auto insurance policy that reimburses you when you change the oil but not when your car gets totaled.
You might ask how Obamacare could encourage the proliferation of such policies. It was sold as a way to provide more coverage for more people after all.
And people were told they could keep the health insurance they had.
As Weaver and Mathews explain Obamacares requirement that insurance policies include essential benefits such as mental health services apply only to small businesses with fewer than 50 employees.
But larger employers they write need only cover preventive service without a lifetime or annual dollar-value limit in order to avoid the across-the-workforce penalty. Low-benefit plans may cost an employer only $40 to $100 a month per employee. Thats less than the $2000-per-employee penalty for providing no insurance.
We wouldnt have anticipated that thered be demand for these type of Band-Aid plans in 2014 the Journal quotes former White House health adviser Robert Kocher. Our expectation was that employers would offer high-quality insurance.
Oops. It turns out that Friedrich Hayek may have been right when he wrote that central planners would never have enough information to micromanage the economy.
Its probably true that businesses trying to attract and retain high-skill employees for long-term positions have an economic incentive to offer generous and attractive health insurance. Otherwise theyd lose good people to competitors.
But the kind of businesses mentioned in the Journal story -- restaurants retailers assisted-living chains -- tend to employ lower-skill workers who typically work there only temporarily.
In a high-unemployment economy they may not need to offer gold-plated health insurance to get the workforce they need.
Such employers would have to pay a $3000 penalty for each employee who buys insurance on Obamacares health insurance exchanges. But it seems likely that many workers especially young ones would opt not to pay the hefty premiums for that.
The problem here is that Obamacares architects seem to misunderstand the concept of insurance.
People buy insurance to pay for low-probability high-cost and undesirable events. It doesnt make sense to hold onto enough cash to replace your house if it burns when you can buy an insurance policy that will cover that unlikely disaster.
But Health and Human Services Secretary Kathleen Sebelius has a different idea of what insurance is.
In response to an American Society of Actuaries report that health insurance premiums would rise 32 percent under Obamacare she said Some of these folks have very high catastrophic plans that dont pay for anything unless you get hit by a bus.
Her idea apparently is that insurance should pay for just about every health care procedure.
In her defense the World War II decision to make the cost of health insurance deductible for employers and nontaxable for employees has moved things in that direction. Many people have come to expect that.
But as the Daily Beasts Megan McArdle commented Coverage of routine predictable services is not insurance at all; its a spectacularly inefficient prepayment plan.
Some Obamacare architects including its namesake want to move toward a single-payer system in which government would pay all health care costs.
Many Obamacare opponents want a bigger role for markets allowing consumers to choose insurance that covers catastrophes and paying for routine costs with tax-free (and in some cases subsidized) dollars.
But if large numbers of employees are enrolled in skinny health insurance plans as the Wall Street Journal article suggests Obamacare will have produced an unanticipated outcome no one wants.
People stuck with these policies will have insurance that pays for the equivalent of oil changes (up to six a year!) but not for the equivalent of wrecked car. Just the opposite of real insurance.
Michael Barone senior political analyst for The Washington Examiner (www.washingtonexaminer.com) is a resident fellow at the American Enterprise Institute a Fox News Channel contributor and a co-author of The Almanac of American Politics.
Would you like to have a skinny health insurance policy? Probably not. But if youre employed by a large company you may get one thanks to Obamacare.
Thats the conclusion of Wall Street Journal reporters Christopher Weaver and Anna Wilde Mathews. They report that insurance brokers are pitching and selling low-benefit policies across the country.
You might be wondering what a skinny or low-benefit insurance plan is. The terms may vary but the basic idea is that policies would cover preventive care a limited number of doctor visits and perhaps generic drugs.
They wouldnt cover things such as surgery hospital stays or prenatal care. That sounds similar to an auto insurance policy that reimburses you when you change the oil but not when your car gets totaled.
You might ask how Obamacare could encourage the proliferation of such policies. It was sold as a way to provide more coverage for more people after all.
And people were told they could keep the health insurance they had.
As Weaver and Mathews explain Obamacares requirement that insurance policies include essential benefits such as mental health services apply only to small businesses with fewer than 50 employees.
But larger employers they write need only cover preventive service without a lifetime or annual dollar-value limit in order to avoid the across-the-workforce penalty. Low-benefit plans may cost an employer only $40 to $100 a month per employee. Thats less than the $2000-per-employee penalty for providing no insurance.
We wouldnt have anticipated that thered be demand for these type of Band-Aid plans in 2014 the Journal quotes former White House health adviser Robert Kocher. Our expectation was that employers would offer high-quality insurance.
Oops. It turns out that Friedrich Hayek may have been right when he wrote that central planners would never have enough information to micromanage the economy.
Its probably true that businesses trying to attract and retain high-skill employees for long-term positions have an economic incentive to offer generous and attractive health insurance. Otherwise theyd lose good people to competitors.
But the kind of businesses mentioned in the Journal story -- restaurants retailers assisted-living chains -- tend to employ lower-skill workers who typically work there only temporarily.
In a high-unemployment economy they may not need to offer gold-plated health insurance to get the workforce they need.
Such employers would have to pay a $3000 penalty for each employee who buys insurance on Obamacares health insurance exchanges. But it seems likely that many workers especially young ones would opt not to pay the hefty premiums for that.
The problem here is that Obamacares architects seem to misunderstand the concept of insurance.
People buy insurance to pay for low-probability high-cost and undesirable events. It doesnt make sense to hold onto enough cash to replace your house if it burns when you can buy an insurance policy that will cover that unlikely disaster.
But Health and Human Services Secretary Kathleen Sebelius has a different idea of what insurance is.
In response to an American Society of Actuaries report that health insurance premiums would rise 32 percent under Obamacare she said Some of these folks have very high catastrophic plans that dont pay for anything unless you get hit by a bus.
Her idea apparently is that insurance should pay for just about every health care procedure.
In her defense the World War II decision to make the cost of health insurance deductible for employers and nontaxable for employees has moved things in that direction. Many people have come to expect that.
But as the Daily Beasts Megan McArdle commented Coverage of routine predictable services is not insurance at all; its a spectacularly inefficient prepayment plan.
Some Obamacare architects including its namesake want to move toward a single-payer system in which government would pay all health care costs.
Many Obamacare opponents want a bigger role for markets allowing consumers to choose insurance that covers catastrophes and paying for routine costs with tax-free (and in some cases subsidized) dollars.
But if large numbers of employees are enrolled in skinny health insurance plans as the Wall Street Journal article suggests Obamacare will have produced an unanticipated outcome no one wants.
People stuck with these policies will have insurance that pays for the equivalent of oil changes (up to six a year!) but not for the equivalent of wrecked car. Just the opposite of real insurance.
Michael Barone senior political analyst for The Washington Examiner (www.washingtonexaminer.com) is a resident fellow at the American Enterprise Institute a Fox News Channel contributor and a co-author of The Almanac of American Politics.
