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Big Questions About Insurance Plans With Limited Coverage

One of the bigger debates raging in health policy circles at the moment is about the value of rather small health insurance polices.

These so-called “mini-med” plans typically offer only a few thousand dollars in coverage. But they don’t cost much. Are they worth their admittedly mini-size premiums?

Critics say no. And at a Senate hearing Tuesday, opponents of the plans raised another concern: The actual coverage people get may be even smaller than they think.

The U.S. Department of Health and Human Services has given McDonald’s and several other corporations permission to continue their limited benefit plans, at least for another year, to prevent them from dropping insurance coverage altogether.

Virtually all the mini-med plans violate rules now in effect requiring insurers to provide annual benefit limits no lower than $750,000 in 2011, rising to $2 million in 2013.

But Eugene Melville, a retail worker from Riverside, Calif., who testified before the Senate Commerce, Science, and Transportation Committee, saying his mini-med policy didn’t even provide the $20,000 he thought he’d signed up for.

Diagnosed with oral cancer in July, Melville was scheduled for laser surgery at a nearby hospital. But five days before his procedure, he received a call that it had been canceled. Why? “My insurance company had told them I had reached the annual benefits maximum on my policy for the 2010 calendar year,” he said.

Melville said that confused him because he knew he’d spent nowhere near the $20,000 limit. That’s when he discovered his limit was actually divided into different categories.

“My policy actually has a $2,000 annual limit on physician visits and outpatient treatments,” he told the committee. Then, barely choking back tears, he added that is an amount that “doesn’t even begin to cover the cost of the life-saving treatments I need for my oral cancer.”

Melville eventually was able to enroll in a program that provides care for the medically indigent. But the services he is receiving – chemotherapy and radiation – are not the ones originally recommended by his oncologist.

That brought cries of outrage from committee chairman Sen. Jay Rockefeller (D-WV). He said Melville’s experience illustrates the biggest problem with mini-meds “it gives people a false sense of security. It makes people think they have insurance when they really don’t.”

If there’s anything to be said in favor of even stripped-down insurance, it might be the nugget in a comment to a post about the debate over at the Wall Street Journal Health Blog. “Take One” points out that someone with insurance that comes up short may still be able to take advantage of discounted rates unavailable to people without coverage.

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