The 'dollar menu' version of health insurance?

It was a busy week for health-insurance news, including reports about seemingly lagging enrollment in some states for the new high-risk plans mandated by the health-care overhaul. (Pennsylvania, which set a more-affordable monthly premium of $283, is suffering no shortage of applicants, according to this story on the new law's "growing pains.")

But one piece stood out as especially insightful: David Leonhardt's column in the New York Times on the law's potential impact on some versions of health insurance, such as the "mini-med" plans that McDonalds offers its hourly employees - plans that are basically just "better than nothing":

McDonald’s offers its hourly workers two different health care plans, which are known as “mini-med” plans. In one, workers can pay about $730 a year for benefits of up to $2,000. In the other, they can pay about $1,660 a year for benefits of up to $10,000, The Journal reported.

In a memo to federal regulators, McDonald’s executives argued that their version of health insurance “positively impacts” the almost 30,000 workers who are covered. And that’s true. A plan with a $2,000 or $10,000 cap can cover some modest health problems and is better than being uninsured.

But should the litmus test for American health care really be better than nothing?

Mini-med plans force people to drain their savings accounts for dozens of common medical problems. They also force hospitals to let some bills go unpaid, which drives up costs for everyone else.

Leonhardt was responding to this report in last week's Wall Street Journal, which said that McDonald's had warned federal regulators that it might have to drop such "mini-med" plans for nearly 30,000 hourly workers "unless regulators waive a new requirement of the U.S. health overhaul." Yesterday, the news was that waivers have been granted.

To Leonhardt, the real significance of the story was something else: as a sign that the new law in working - or would eventually work - by disrupting a Swiss-cheese system and requiring that health insurance live up to its name.  A plan such as McDonalds' wouldn't provide sufficient benefits to cover "virtually any cancer treatment, any heart surgery, a year’s worth of diabetes treatment and care for many broken bones. Even a single M.R.I. exam can cost more than $2,000. A typical hospital stay runs thousands of dollars more," he wrote. "So does this insurance plan sound like part of the solution for the country’s health care system — or part of the problem?"

This excerpt makes Leonhardt's key point:

This episode was only the latest disruption that the health law seems to be causing. Also last week, the Principal Financial Group said it was getting out of the health insurance business, while other insurers have said they might stop offering certain types of coverage. With each new disruption come loud claims — some from insurance executives — that the health overhaul is damaging American health care.

On the surface, these claims can sound credible. But when you dig a little deeper, you often discover the same lesson that the McDonald’s case provides: the real problem was the status quo.

American families spend almost twice as much on health care — through premiums, paycheck deductions and out-of-pocket expenses — as families in any other country. In exchange, we receive top-notch specialty care in many areas. Yet on the whole, we do not get much better care than countries that spend far less.

We don’t live as long as people in Canada, Japan, most of Western Europe or even relatively poor Jordan. Misdiagnosis is common. Medical errors occur more often than in some other countries. Unique to the developed world, millions of people have no health insurance, and millions more, like many fast-food workers, are underinsured.

In choosing their health reform plan, President Obama and the Democrats eschewed radical changes, for better or worse, and instead tried to minimize the disruptions to the current system. Sometimes, Mr. Obama went so far as to suggest there would be no disruptions, saying that people could keep their current plan if they liked it. But that’s not quite right. It is not possible to change a system as huge, and as hugely flawed, as ours without some disruptions.

There's more here from Leonhardt on the McDonalds controversy.  Click here to read the original column.