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'Mini meds' latest medicine for rising health care costs: Employers begin to embrace limited-benefit plans

November 19, 2007

Two years ago, Indianapolis insurance broker Greg Wright started hawking an old kind of health insurance in a new way.

He calls it a mini med. Others call it a limited-benefit health plan. It allows employers or their employees to pick coverage from a menu of items and receive insurance for only those items. If they don't pick emergency room visits, for example, they're not insured for them.

It's the kind of bare-bones benefits some retailers and restaurants, such as McDonald's franchises, have offered for years to their part-time employees.

But now, brokers and wholesalers say, mini meds are being offered to full-time employees by a handful of small companies straining under the weight of fast-rising health insurance premiums.

Mini meds are one more way employers, particularly smaller ones, can shift more of the cost or risk of health coverage to employees. Already, more than a third of companies with fewer than 200 workers require their employees to pay more than half of their health insurance premiums, according to the Kaiser Family Foundation.

Other cost-shifting measures include health savings accounts paired with catastrophic insurance or jacking up the deductible amount on traditional preferred provider plans, or PPOs.

Some companies in recent years even have dropped health benefits altogether. Wright said he embraced mini meds "when I saw that the smaller employers were bailing out of health insurance because they couldn't bear all the increases that were being thrown their way."

Wright learned about mini meds from Bill Crimmins, a Greencastle wholesaler who connects insurance companies to brokers in Indiana. Crimmins matched up South Carolina-based Companion Life with Wright and other brokers in the state. Other insurers, such as Cigna Corp, offer mini meds, too.

"There's a lot more interest in them. They're being marketed heavily," Crimmins said.

Indeed, health insurance premiums for a family of four have skyrocketed 78 percent since 2001, according to the Kaiser Family Foundation, more than quadruple the rate of inflation over that same period. Among employers with fewer than 200 employees, just 59 percent offer health insurance to their employees, down from 68 percent in 2001.

Wright is happy to talk about mini meds, but he declined to make available any of his "few" clients that have offered a mini-med plan to their full-time workers. Other brokers were equally reluctant to name their mini-med clients.

"A lot of them are not proud of this. If they're doing it with their full-timers, they're certainly not proud of it," said Crimmins, owner of B&B Risk Services in Greencastle.

Not all brokers are proud, either. When a company called Starbridge introduced a mini-med product for McDonald's franchises in the 1980s, Crimmins said, brokers would have labeled him "crazy" if he pitched it to them.

"When people like me and people in our industry initially saw these offerings, we were kind of embarrassed by them," Crimmins said.

But after two spikes in health insurance premiums-in the early 1990s and again in the early 2000s-attitudes are changing.

Even Julia Vaughn, health issues coordinator for the consumer group Citizens Action Coalition of Indiana, recognized that "something's got to give" at employers struggling with premium increases.

"Certainly, the coverage is not what they've come to expect," Vaughn said. "It just points to the need for comprehensive reform."

For Vaughn, that reform means a Medicare-for-all kind of program, where employers would pay higher taxes but would be freed from paying health insurance premiums.

Until then, insurance brokers expect employers to keep searching for new ways to at least ease the pain of rising costs.

And that includes mini-med plans, said Bob Miller, an insurance consultant at Gregory & Appel in Indianapolis.

"There's three or four different carriers who are beginning to offer that as a possible alternative," he said. "They're getting a little more popular just because of the rising health care costs."
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