Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

How medical loss ratios impact mini-med policies

Roger Collier
Policy
February 23, 2011
Share
Tweet
Share

It’s amazing how much trouble a couple of hundred inexpensive health insurance policies can cause.

Up until recently, few people were aware of the existence of so-called mini-med policies. Marketed primarily by for-profit insurers Aetna and Cigna, they are designed to provide bare-bones coverage to employees of low-wage low-margin service companies. Unlike other approaches to affordable insurance that emphasize catastrophic coverage, mini-meds typically keep premiums affordable (some as low as $15 a week) by imposing very low annual benefit limits, although with no medical underwriting or pre-existing condition provisions and with fairly generous benefits up to the limits.

Mini-meds first hit the news in September, when McDonald’s reportedly threatened to stop offering this coverage to its employees in response to Affordable Care Act (ACA) rules that set annual benefit limits at $750,000 — far, far higher than mini-med limits, and potentially turning mini-med coverage into typical high cost insurance.

With insurers and employers reminding the public of President Obama’s campaign promise to allow Americans to retain their existing coverage, HHS Secretary Kathleen Sebelius quickly backed away from the language of ACA. Early in October, HHS announced the granting of one-year waivers of the ACA benefit limit provision for McDonald’s and several other employers, a number that has now climbed to more than 200.

The next mini-med problem to find the spotlight was ACA’s medical loss ratio provision, requiring at least an 85 percent medical loss ratio (MLR) for large group coverage, but with mini-meds’ very low benefit payouts relative to administrative costs making the threshold impossible to achieve. Insurers with only a very small percentage of mini-meds might still be able to meet the MLR threshold, but companies with substantial mini-med business would find achieving the 85 percent target impossible.

One reaction to the mini-meds’ difficulties came from Senator Jay Rockefeller, a key backer of the MLR rules. The Senator quickly convened committee hearings on the issue, and was able to hear testimony from a parade of witnesses who had discovered too late that their “affordable coverage” covered almost none of the costs of any serious illness or accident. In contrast, insurer and employer representatives touted the pluses of offering at least a minimal level of coverage to as many as a million workers, until the premium subsidies of ACA are scheduled to become effective in 2014.

Trapped in a kind of Bermuda triangle between the threat of insurers’ abandoning the plans, Senator Rockefeller’s determination to stamp down on them, and the possibility of a million workers losing their insurance—however inadequate—HHS demonstrated some fancy footwork.

In the MLR final interim regulations released at the end of November, HHS included separate rules for mini-meds, essentially allowing insurers to inflate benefit expenditures in computing MLR percentages in order to have a chance of meeting the ACA thresholds.

Then HHS issued additional transparency rules for mini-meds: insurers must notify consumers if their health care coverage is subject to an annual dollar limit lower than what is required under the law. Specifically, the notice must include the dollar amount of the annual limit along with a description of the plan benefits to which the limit applies. These latest rules also limit new sales of mini-med plans, including restricting such sales only to insurers who already have obtained waivers of the annual limit provision.

Reactions from insurers have been muted, presumably indicating that the industry believes it can live with the new rules, at least until Republican-dominated House committees can further erode HHS’ implementation of ACA.

Roger Collier is a consultant specializing in health care policy issues who blogs at Health Care Reform Update.

Submit a guest post and be heard on social media’s leading physician voice.

Prev

Evolution of tablet devices for the hospital

February 23, 2011 Kevin 2
…
Next

How important is a doctor's skill in the physical exam of a patient?

February 23, 2011 Kevin 8
…

ADVERTISEMENT

Tagged as: Public Health & Policy

Post navigation

< Previous Post
Evolution of tablet devices for the hospital
Next Post >
How important is a doctor's skill in the physical exam of a patient?

ADVERTISEMENT

More by Roger Collier

  • New proposals for universal health care in Oregon and Washington

    Roger Collier
  • a desk with keyboard and ipad with the kevinmd logo

    What if the individual mandate was unconstitutional?

    Roger Collier
  • a desk with keyboard and ipad with the kevinmd logo

    Political approaches on how to slow Medicare’s escalating costs

    Roger Collier

More in Policy

  • Unused IV catheters cost U.S. hospitals billions

    Piyush Pillarisetti
  • Why your health care dashboard isn’t working and how to fix it

    Dave Cummings, RN
  • Nuclear verdicts and rising costs: How inflation is reshaping medical malpractice claims

    Robert E. White, Jr. & The Doctors Company
  • How new loan caps could destroy diversity in medical education

    Caleb Andrus-Gazyeva
  • Why transplant equity requires more than access

    Zamra Amjid, DHSc, MHA
  • Ideology, not evidence, fuels the anti-trans agenda

    Andie Riffer, PhD and Shawn E. Parra, LCSW, MSW
  • Most Popular

  • Past Week

    • The human case for preserving the nipple after mastectomy

      Thomas Amburn, MD | Conditions
    • Nuclear verdicts and rising costs: How inflation is reshaping medical malpractice claims

      Robert E. White, Jr. & The Doctors Company | Policy
    • IMGs are the future of U.S. primary care

      Adam Brandon Bondoc, MD | Physician
    • Why I left the clinic to lead health care from the inside

      Vandana Maurya, MHA | Conditions
    • How doctors can think like CEOs [PODCAST]

      The Podcast by KevinMD | Podcast
    • A surgeon’s testimony, probation, and resignation from a professional society

      Stephen M. Cohen, MD, MBA | Physician
  • Past 6 Months

    • Health equity in Inland Southern California requires urgent action

      Vishruth Nagam | Policy
    • How restrictive opioid policies worsen the crisis

      Kayvan Haddadan, MD | Physician
    • Why primary care needs better dermatology training

      Alex Siauw | Conditions
    • Why pain doctors face unfair scrutiny and harsh penalties in California

      Kayvan Haddadan, MD | Physician
    • How a doctor defied a hurricane to save a life

      Dharam Persaud-Sharma, MD, PhD | Physician
    • What street medicine taught me about healing

      Alina Kang | Education
  • Recent Posts

    • Affordable postpartum hemorrhage solutions every OB/GYN can use worldwide [PODCAST]

      The Podcast by KevinMD | Podcast
    • When cancer costs too much: Why financial toxicity deserves a place in clinical conversations

      Yousuf Zafar, MD | Physician
    • Psychiatrist tests ketogenic diet for mental health benefits

      Zane Kaleem, MD | Conditions
    • The hidden rewards of a primary care career

      Jerina Gani, MD, MPH | Physician
    • Why physicians should not be their own financial planner

      Michelle Neiswender, CFP | Finance
    • Why doctors regret specialty choices in their 30s

      Jeremiah J. Whittington, MD | Physician

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 1 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

ADVERTISEMENT

  • Most Popular

  • Past Week

    • The human case for preserving the nipple after mastectomy

      Thomas Amburn, MD | Conditions
    • Nuclear verdicts and rising costs: How inflation is reshaping medical malpractice claims

      Robert E. White, Jr. & The Doctors Company | Policy
    • IMGs are the future of U.S. primary care

      Adam Brandon Bondoc, MD | Physician
    • Why I left the clinic to lead health care from the inside

      Vandana Maurya, MHA | Conditions
    • How doctors can think like CEOs [PODCAST]

      The Podcast by KevinMD | Podcast
    • A surgeon’s testimony, probation, and resignation from a professional society

      Stephen M. Cohen, MD, MBA | Physician
  • Past 6 Months

    • Health equity in Inland Southern California requires urgent action

      Vishruth Nagam | Policy
    • How restrictive opioid policies worsen the crisis

      Kayvan Haddadan, MD | Physician
    • Why primary care needs better dermatology training

      Alex Siauw | Conditions
    • Why pain doctors face unfair scrutiny and harsh penalties in California

      Kayvan Haddadan, MD | Physician
    • How a doctor defied a hurricane to save a life

      Dharam Persaud-Sharma, MD, PhD | Physician
    • What street medicine taught me about healing

      Alina Kang | Education
  • Recent Posts

    • Affordable postpartum hemorrhage solutions every OB/GYN can use worldwide [PODCAST]

      The Podcast by KevinMD | Podcast
    • When cancer costs too much: Why financial toxicity deserves a place in clinical conversations

      Yousuf Zafar, MD | Physician
    • Psychiatrist tests ketogenic diet for mental health benefits

      Zane Kaleem, MD | Conditions
    • The hidden rewards of a primary care career

      Jerina Gani, MD, MPH | Physician
    • Why physicians should not be their own financial planner

      Michelle Neiswender, CFP | Finance
    • Why doctors regret specialty choices in their 30s

      Jeremiah J. Whittington, MD | Physician

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

How medical loss ratios impact mini-med policies
1 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...