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Growth in limited health plans

Limited health plans, covering only routine, non-hospital care, appear to be growing in popularity. The plans, with little to no underwriting and guaranteed level premiums, limit coverage by capping expenses at levels from $1000 to $20,000.
Companies such as Intel, Sears, and IBM, in addition to a number of other large employers, are slated to begin offering these plans next year.
I can’t figure out why anyone would buy one of these plans. The big fear that drives health insurance coverage is catastrophic care; as people buy insurance based on fear, the limited plans do little to meet the market’s need.
One potential impact if these plans grow in popularity is the reduction in the number of those uninsured. However, that would be a highly misleading finding, as the low coverage limit will undoubtedly lead to uncompensated care. One could also argue that insureds will be more likely to pursue more expensive care, as they are not disincented from routine office visits, diagnostic lab and x-ray, and other medical services that may find potentially expensive medical conditions.

One thought on “Growth in limited health plans”

  1. Not to mention, how do you underwrite or pool risk in a situation like that? You already know going in exactly what people are going to spend on services. Sort of undermines the meaning of the term “risk”.
    The only benefit I can think of is that you’re buying access to a network and avoiding paying billed charges.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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