Chairman Rockefeller's Remarks: Are Mini Med Policies Really Health Insurance?

December 1, 2010

Chairman RockefellerWASHINGTON, D.C.—More than a million Americans wake up and go to work every day thinking they have health insurance. But they don’t. They don’t have the kind of comprehensive health insurance that most of the people in this hearing room probably have - the kind that protects you from financial ruin if you get sick. Instead, they have something called “limited benefit” or “mini medical” insurance.

This is an insurance product that has been around for about two decades, but became more popular about five years ago after two of the leading national health insurers – CIGNA and Aetna – started selling it. Wendell Potter, a former CIGNA executive who testified before our Committee last year, called these plans “fake insurance” designed to earn big profits for the insurers, but provide little value to consumers.

Most people in this hearing room probably don’t have much experience with mini med plans. But if you work at a restaurant or a retail store chain in this country, or if you’re a young adult working a part-time or temporary job while you’re looking for a permanent one, mini med insurance might be the only option you have. Employers who offer this “health insurance” to their employees make a nice pitch. They hand out glossy brochures. They say it will only cost a few dollars a week.

McDonald’s hands out a pamphlet to its hourly restaurant employees. I’ve seen it. This booklet tells new McDonald’s employees they can get a health insurance plan that will help them “pay for the medical care you need when you’re sick, injured or have an ongoing medical condition.” And all of these great benefits only cost McDonald’s employees as little as $14 dollars a week deducted out of their paycheck.

But buried in the fine print of this policy – in confusing industry jargon – is a very different story. The true story is that this McDonald’s mini med policy will not pay your bills if you have a serious health problem. A McDonald’s employee named Katrina Fulton, from Monticello, Kentucky, learned this lesson the hard way. She thought she had health insurance through her McDonald’s job, until she needed treatment for her colitis. Now she has more than $10,000 in unpaid medical bills.

The mini med insurance policy most commonly sold to McDonald’s hourly employees like Ms. Fulton has an annual limit of $2,000. That’s it. Two thousand dollars. Anything more than $2,000 and McDonald’s workers pay for it out of their own pockets. What will $2,000 dollars cover in our health care system? Not much. It won’t cover the cost of having a baby. That costs approximately $9,000. And it won’t cover one year of health care for a person with diabetes. That costs more than $7,000 a year. And as we are going to hear from our witnesses today, the cost of treating a health problem like cancer can easily exceed $50,000 or even $100,000.

Today, we are going to learn more about mini med insurance policies. Some people are going to say that even though these mini med plans have skimpy coverage, they are “better than nothing” for consumers. They say that McDonald’s employees and other workers should be grateful they have this coverage, even though it won’t protect them against the costs of a serious illness or accident. But we’re also going to hear people argue that mini med insurance is worse than nothing. It gives people a false sense of security – it lets them think they have health insurance when they really don’t. By the time they realize they don’t have real health insurance, it’s too late. They have already received a huge hospital bill or have had their testing or surgery cancelled because their so-called “health insurance” is worthless.

I am very pleased to say that the days of these mini med plans are numbered. The new health care reform law is slowly putting an end to health plans that place caps on essential health services. Now, some people will say health reform is “government-controlled” health care because it sets some basic standards that protect consumers. But nobody would knowingly buy a car without a working airbag. People expect to buy safe consumer products. And they should expect basic protections from their health insurance, too. The only reason they buy these mini-med plans is that right now, they have no other choice.

That is why health reform was necessary. Starting in 2014, there will be a new health insurance marketplace where people will be able to buy real, comprehensive health insurance – the kind of insurance that protects you from financial ruin when you get sick. But it’s not 2014 yet. There are more than a million Americans today who are covered by these policies, and we don’t really know if these plans are doing more harm than good. I look forward to learning more about these plans from our witnesses today.