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December 17, 2013

Mandate Revolt: Health Insurers Offering Coverage for Those Who Refuse Obamacare

 

Some health insurers are offering health plans that do not meet Obamacare standards, apparently because they believe there is an opportunity to provide at least some coverage to millions of Americans who refuse to buy an Obamacare plan. 

Some pundits and the media have stated or implied that it is illegal for health insurers to sell coverage that does not meet the Affordable Care Act’s “essential benefits” (i.e., things it must cover). 

It’s not illegal; insurers are free to sell non-qualified coverage, subject to state insurance department approval. 

However, a person buying non-qualified coverage would still have to pay the penalty (or tax) for not having the kind of coverage President Obama approves of—what he likes to call “substandard coverage,” but which many others call affordable. 

Assurant is one of the largest insurers for the individual (i.e., non-group) market. It has long offered limited policies, and still does, even with Obamacare’s mandate to have qualified coverage breathing down its neck. It’s Health Access fixed-indemnity product—which means it pays a fixed amount of money rather than a percentage of the medical bill—costs $94, $159 or $249 a month for a 50-year-old male, depending on the coverage options a person chooses.

But Assurant isn’t the only one. I am told that United Healthcare has developed a limited-benefit plan and is now working to get it approved in several states. As is Texas-based American National. 

Companies that see the potential for a non-complier market—Americans who refuse to take Obamacare for whatever reason—know that some of these individuals would like to have something, just not Obamacare. And they are very upfront in announcing that the policy does not meet the new federal standards. 

It’s hard to miss the irony. Most health insurers were generally supportive of Obamacare, albeit with some reservations, because they thought they would, in essence, have a captive audience. The Affordable Care Act required people to buy their product. 

But if some people are willing to pay a penalty on top of paying for unqualified coverage, that creates a business opportunity also—one that at least some health insurers are willing to exploit. The market will find a way, in spite of the government’s continued effort to squelch it.


 

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