ObamaCare could wipe out health insurance for 1 million low-income workers

posted at 10:12 am on June 8, 2010 by Ed Morrissey

Well, Nancy Pelosi did tell us that we wouldn’t know what was in the ObamaCare bill until it became law.  However, this development really isn’t a surprise, but actually part of the plan.  Politico notes that as many as a million low-income workers currently covered under “mini-med” health plans will find themselves with no coverage at all, thanks to a ban on hard-cap plans offered at low cost:

Part of the health care overhaul due to kick in this September could strip more than 1 million people of their insurance coverage, violating a key goal of President Barack Obama’s reforms.

Under the provision, insurance companies will no longer be able to apply broad annual caps on the amount of money they pay out on health policies. Employer groups say the ban could essentially wipe out a niche insurance market that many part-time workers and retail and restaurant employees have come to rely on.

This market’s limited-benefit plans, also called mini-med plans, are priced low because they can, among other things, restrict the number of covered doctor visits or impose a maximum on insurance payouts in a year. The plans are commonly offered by retail or restaurant companies to low-wage workers who cannot afford more expensive, comprehensive coverage.

Depending on how strictly the administration implements the provision, the ban could in effect outlaw the plans or make them so restrictive that insurance companies would raise rates to the point they become unaffordable.

This is entirely deliberate, although Congress apparently never considered the timing.  Barack Obama and Pelosi continually harped about the “underinsured,” and the mini-med plans are what they had in mind.  They wanted to put an end to such cost-efficient plans and force employers to either provide comprehensive insurance or kick their employees into the state-run exchanges, where the newly-uninsured would get welfare payments to buy their own plans in the individual market.

Democrats will get their wish — but the employees won’t get their coverage.  The law imposes the penalties for mini-med plans in three months, but the exchanges won’t start until 2014. That means more than three years of having no insurance at all for low-income workers who previously had it, even if Obama and Pelosi sniffed at the worth of the plans.

Why did they impose the mandates first?  This was part of the “front-load” strategy of the Democrats, who wanted to implement what they thought would be the most popular components of ObamaCare immediately, in order to build support for its continuance.  Instead, the mandates will mean that mini-med plans will either cost so much that the employees can’t afford it, or more likely, the insurers will drop the plans as money-losers.  It’s a big indicator that the people who drafted the law had very little understanding of the insurance industry, or of the private sector.

It’s also worth noting the irony of the timing.  The mandates kick in in September, which is probably when the insurers will terminate the coverage.  That means up to a million people will get the first-hand impact of ObamaCare just nine weeks before going to the polls in the midterm elections.  That certainly qualifies as an unintended consequence.

Update: Bruce Kesler says that the Cadillac-plan tax will force Americans into Yugo-like coverage, but not if the government outlaws Yugos.


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