Editor’s Note: Aaron Smith, co-founder of the Young Invincibles, brings a fresh perspective to the old issue of mini-med plans. He testified before a Senate Committee on this topic last week so we asked him to share his views with our readers.
By Aaron Smith, co-founder of Young Invincibles
There has been a great deal of attention recently to the issue of mini-med plans. These low-cost plans typically have very weak benefits and low benefit caps and are targeted at low-wage workers. For Young Invincibles, an organization that fights for the health care needs of 18 to 34 year olds, these plans are particularly concerning because of their impact on young adults. For example, almost 40% of enrollees on Aetna mini-med plans are under the age of 30. And youth make up a very large percentage of the retail, restaurant, and temporary staffing industries that often utilize these plans.
So what exactly is the problem with mini-med plans for young adults? Aren’t they “invincible” anyway?
First, benefit caps on mini-meds are often as low as $5,000. That means when young adults get injured or sick with these plans, they often face thousands of dollars in medical bills. And young adults do need care. Nearly one in ten young adults have between $5,000 and $50,000 in medical bills per year, and young adults 19 to 29 go to the emergency room more than any other age group under the age of 75.
One emergency room visit can easily cost thousands of dollars and on a mini-med plan most of those costs are paid out-of-pocket and at times can go uncompensated. It can even mean bankruptcy for a young adult making $8 per hour with no savings.
Second, mini-med plans are often deceptively advertised to young workers as full coverage, when they are not comprehensive at all. This is a big problem for first-time consumers of insurance. For example, only 29 percent of college students who participated in a recent survey understood the meaning of a “premium,” and only 30 percent knew what a “life-time coverage limit” meant.
Insurance plans and their maze of deductibles, benefit caps and co-insurance are complicated enough for even experienced consumers. Distinguishing types and quality of insurance is difficult for young people completely new to the insurance system. Because of this lack of understanding, they are even more susceptible to the economic allure of mini-meds and their self-evident affordability.
These problems with mini-meds only highlight the need to move as quickly as possible to full implementation of the Affordable Care Act, which will greatly improve the options for young adults eager for affordable, comprehensive insurance. In the meantime, however, employers should work to improve the benefits available to workers and ensure they have a decent standard of coverage. Ultimately, it is in the best interest of all of us to bring young workers into the health insurance system, to pay their fair share for affordable medical care that will keep them healthy, productive and ready for the future.