From MSNBC today
Get ready for the latest twist in the Obamacare overhaul: the spread of bare-bones health insurance plans.
When the Affordable Care Act goes into effect in 2014, employers with more than 50 full-time workers will be required to provide health insurance plans. Some companies are crying foul, pointing to the $15,745 annual premium for employer-sponsored family health plans as unsustainable.
Enter the Band-Aid health insurance policy. These low-benefit plans, which cover preventive services but often skip coverage for surgery, X-rays and hospitalization, are getting pitched to companies as a way to meet the letter of the law while avoiding a government fine, according to The Wall Street Journal.
Under Obamacare, companies that fail to provide insurance will pay a $2,000 penalty per employee. Some companies have said they will drop plans, figuring the penalty would be less costly than providing insurance, as MSN Money reported in April. Some businesses, such as Regal Entertainment Group (RGC -0.14%), are scaling back employee hours to avoid the health coverage mandate for full-time employees.
The Band-Aid policies would mean employers would pay premiums of only $40 to $100 a month per employee, making the priciest versions only $1,200 a year per worker. That beats paying a $2,000 fine, and it may explain why some businesses are perking up at the idea.
"For certain organizations, it may be an ideal solution to minimize the cost of opting out," David Ellis, the chief executive of LifeStream Complete Senior Living, told the Journal. His company, which employs 350 workers, was recently pitched such a bare-bones plan and is considering the idea.
Administration officials told the Journal they're surprised that some employers are mulling such plans. "Our expectation was that employers would offer high-quality insurance," Robert Kocher, a former White House health adviser who worked on the legislation, told the publication.
That may strike some people as evidence that the administration is out of touch with corporate realities. After all, anyone who's run a business knows keeping costs down is always top of mind.
"What our goal was all along was to make (offering coverage) financially palatable for the company as a whole, so we didn't do damage and have to let people go or slow down our growth," Brian Livingston, the chief financial officer of Firebird Restaurant Group, the owner of El Fenix, told the Journal.
His chain, which employs 1,200 workers, will offer limited plans that will cover preventative care and drugs but won't pay for surgery or hospitalizations.