Feds to require big companies to cover hospitalization
Jayne O'Donnell - USA TODAY
9:07 p.m. EST November 3, 2014
The Obama administration plans to close a loophole in the Affordable Care Act
that allows large companies to refuse to cover in-patient hospital stays in any
of their health insurance plans, according to an official involved in the
internal discussions.
The official requested anonymity until the announcement is made because "the
guidance that will be issued is not finalized."
Health plans for individuals and those working for smaller employers must
include coverage within at least 10 categories of "essential health benefits"
that include maternity care, prescription drugs and hospitalization.The health
care law is much more stringent about what health insurance must cover for these
people than it is for those working at large employers.
Washington and Lee University law professor Timothy Jost says the employer
health insurance mandate is "not well-designed." It is a loophole, he says, that
large companies "are not required to cover all of the essential health
benefits." To pass the government "minimum value" test, these companies are
required to cover only 60% of the value of some of the essential benefits, so
they "don't have to necessarily offer every one," says Jost, a supporter of the
law and an author of several health law books.
Plans that cap the number of hospital visits — or offer no hospital coverage
at all — could probably pass the ACA's minimum value test if other coverage is
generous enough, says Cori Uccello, senior health fellow with the American
Academy of Actuaries.
Even if they didn't, employers would be allowed to offer these
no-hospital-coverage plans, as long as one of their plans meets this "minimum
value" test, says health care lawyer Alden Bianchi. Companies with more than
100 employees have to pay about a $3,000-per-employee penalty if they don't
offer an affordable health plan next year, and workers who aren't insured have
to pay a penalty as well. Both the company and the employee can avoid the
penalties with a plan that doesn't cover hospitalization or anything other than
preventive services such as physicals as long as one is offered.
Many low-wage workers are likely to be attracted by the low premiums these
plans have. Bianchi says he has many temp and contract worker agency clients who
are investigating and adopting plans that don't offer hospital benefits.
Some experts warn that workers may not realize how "skinny" these plans are —
until it's too late.
Plans that don't cover hospitalization are "preying on vulnerable people who
don't have resources," says Brian Klepper, CEO of the National Business
Coalition on Health. "The purpose of insurance is to cover the services that
most of us cannot afford when we desperately need it."
Small businesses can skirt some of the law's mandates by joining together in
associations to buy insurance. This allows them to be treated like large
employers, which have far fewer health insurance requirements.
Employees at these companies might wind up with plans that don't cover the
essential health benefits required under the ACA. These plans could discriminate
against them based on their age, gender or health status, according to a new
report by the Georgetown University Health Policy Institute.
As open enrollment nears for both government exchanges and many
employer-provided plans, Uccello says potential loopholes underscore the need
for workers to "consider not just the premiums but total out-of-pocket costs,
which reflect the generosity of the plan."
The ACA prohibits limits on total health care coverage, but plans can have
"visit limits," says Kevin Lucia, senior research fellow with the Georgetown
Health Policy institute.
"Whenever there's a regulatory structure, there's going to be some gaming
taking place to maximize profit," says Lucia, co-author of the Georgetown
report, which was funded by the Robert Wood Johnson Foundation. "That's where
regulators need to step in — to make sure it isn't being done to the detriment
of what the ACA is trying to do."
Plans with limited benefits, such as those through associations, or that lack
hospital benefits are most attractive to companies that employ low-wage workers
who can't afford the higher premiums that come with plans with higher levels of
benefits.
Health care lawyer Nancy Taylor, who represents many restaurant companies,
says she doesn't know of any offering plans without hospitalization. Neil
Trautwein, vice president of health care policy at the National Retail
Federation, says no retailers have acknowledged offering such plans.
"People have come in and kicked the tires, but there are not that many early
adopters," Trautwein says. "The sense is that it's a loophole that will get
closed quickly."
Although his benefits company doesn't offer "skinny" plans that don't offer
hospitalization, Allen Wishner, CEO of Flexible Benefit Service in Rosemont,
Ill., says they could make sense for some people.
"Is this serving the greater good? Is this a loophole? I don't know," he
says. "Sometimes the regulators just get it wrong."