MEDICAL MARKETS

Reaction mixed on Aetna's low-priced insurance plan

Nine months after Aetna launched a bare-bones health plan, consumer groups brush it off, but small-business owners say it's better than nothing.

By Julie A. Jacob, AMNews staff. Feb. 14, 2000.

Aetna U.S. Healthcare's "bare-bones" insurance plan geared toward small-business employees, unveiled nine months ago, is now in 32 states and is still dogged by questions as to whether it really helps the uninsured.

Consumer groups say the plan's benefits are so skimpy that they are meaningless, and other insurers say they have no plans to launch similar products. But Aetna officials insist that small businesses welcome the chance to offer their employees at least a minimal health benefit.

Premiums for the plan, called Affordable HealthChoices, range from $46 to $91 per year for single employees and about $150 to $275 for families. But benefits are much more limited than for comprehensive health plans, providing for $500 to $1,500 coverage for three days of hospitalization and lesser amounts for the next seven days, plus $50 per doctor visit, emergency department visit or laboratory test, up to 10 each per year. Enrollees also are eligible for prescription drug discounts and have access to a telephone health information service.

The plan has been implemented more slowly than expected, said Aetna spokeswoman Wendy Morphew, because the company had to iron out regulatory issues with state insurance departments. But the plan is now available in 32 states, she said, although in California it can be marketed only as a supplemental policy, and hospital benefits are restricted in Massachusetts and Ohio. She declined to say how many people were enrolled in the plan.

Morphew said the plan was not designed to provide comprehensive coverage. "This is basic starter insurance, to get people to the doctor. They've got emergency coverage and can plug into discounted pharmacy rates."

But consumer advocates say Aetna's plan doesn't begin to address the issue of how to provide affordable health insurance for 44 million uninsured Americans.

"Those bare-bones policies often fail to provide the coverage that people need, nor do they encourage people to use preventive and primary care in ways that are helpful for their health," said Ron Pollack, executive director of Families USA, a consumer health organization based in Washington, D.C. "Past experience has shown that these bare-bones policies are not popular and don't make a significant difference in expanding coverage to the uninsured."

"We haven't really paid attention to it," said Adrienne Hahn, legislative counsel for Consumers Union. "It's been swallowed up by proposals for more structural types of reforms."

Expanding health insurance to the uninsured can best be addressed by individual tax credits for the purchase of health care, purchasing pools and community rating of premiums, Hahn said.

Cigna HealthCare, Humana Inc. and UnitedHealth Group said they had no plans to launch similar products. "Our perspective is that Aetna's bare-bones plan is more of a public relations product than an actual health insurance product," said United spokesman Jay Silverstein.

Reaction from physicians in Connecticut, one of the states where Aetna offers the plan, has been unfavorable, said Tim Norbeck, executive director of the Connecticut State Medical Society. Doctors fear that if the plan becomes popular, Aetna will use it as a substitute for more comprehensive coverage for small businesses, Norbeck said.

Because the plan is not an HMO, it is not part of Aetna's controversial all-products clause requiring doctors to participate in all Aetna plans if they affiliate with the insurer.

Business owners who have purchased the plan insist that it is better than no coverage at all.

Tom Nihra, who owns a company in Troy, Mich., that manufactures golfing accessories, purchased the Aetna plan for his three employees about six months ago. Up until then, Nihra said, he was unable to find affordable health insurance for his employees. Even premiums for health insurance offered through a purchasing pool run by the Greater Detroit Chamber of Commerce averaged about $300 per month, he said.

"It's better than having nothing," said Nihra, who pays about $40 a month for his two single employees, and $120 for a family policy for his other employee. "I thought it was a nice opportunity to offer something without totally draining our finances," he said.

Rich Shearrow, who owns an employee leasing firm in Columbus, Ohio, has just begun offering the plan to his part-time workers. He said he already offers comprehensive coverage to full-time employees, but was unable to extend that benefit to his part-time workers.

The benefits are limited, Shearrow acknowledged, but added, "Let those consumer groups attempt to provide the health insurance benefits they are talking about at the same price."

About 80% of his part-time workers have signed up for the plan, he said.

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