Plans without hospital coverage face criticism

Pressure is building for the Obama administration to disallow employer-based health plans that technically comply with the Patient Protection and Affordable Care Act but do not offer hospital coverage.

Supporters of the plans contend that such “skinny” plans are better than nothing for low-wage workers. But hospital groups have slammed them. “I can't even envision this administration allowing these plans,” said Chip Kahn, CEO of the Federation of American Hospitals, who predicted a potential consumer revolt.

Some employers are using the plans to avoid the reform law's penalties for companies with 50 or more full-time workers that don't offer affordable coverage. They have relied on a CMS-provided calculator spreadsheet allowing them to design benefits that are actuarially equivalent to bronze-tier plans under the law. They've found they can do so without covering inpatient services.

“It wasn't an intention of the actuaries who designed this to carve out hospitalization,” said Anne Lennan, president of the Society of Professional Benefit Administrators. “They were just being good health actuaries adhering to the law.”

Kevin Schlotman, director of employee benefits at health brokerage Benovation, said these plans are a bridge to more comprehensive coverage. “Most of the employers I'm speaking with are seeing it as a stepping stone,” he said.