AARP Limited-Benefit Health Plans Scrutinized

Bare-bones insurance plans give false sense of financial protection from high costs, says senator.

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Fans of limited-benefit health plans, which often cap coverage for certain types of services like hospitalization or exclude coverage altogether for conditions like pregnancy, tend to argue that "something is better than nothing." But many healthcare experts disagree. The whole point of health insurance, they maintain, is to protect people from being stuck with enormous bills if someone has cancer, for example, or even suffers a relatively benign medical misadventure like appendicitis. These policies, they argue, give people a false sense of security that they're protected. I've previously written about pitfalls to watch out for with limited-benefit plans. Now I see USA Today is reporting that Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee, is asking questions of AARP about that organization's limited-benefit plan offerings, which cover about 1 million people, according to the story.

In conversations with me over the years, a number of health policy experts have expressed their dismay that AARP, which purports to represent the interests of older Americans and whose stamp of approval means something to many of them, is promoting such questionable policies. Of course, with the typical cost of a family policy now approaching $13,000 annually and about a third of Americans reporting they've had trouble paying medical bills in the past year, it's easy to understand why cheaper, bare-bones policies might find a receptive audience. In this economic climate, Senator Grassley's investigation is timely indeed.