By Evan Falchuk

The American health care system is so bad, even people who have health insurance go bankrupt.

Is it true?  It may be.

The New York Times, searching for a poster child for this problem, uncovered other, more interesting questions.

The Times story focuses on so-called limited benefit plans.  These are plans cover you for routine doctor visits, basic diagnostic testing and a portion of the cost of hospitalization.  They usually cost a fraction of a comprehensive medical plan, but there’s a catch:  benefits usually run out at after a few thousand dollars.

Lawrence Yurdin, an Austin, Texas man bought one of these policies.  Based on the plan description, Mr. Yurdin apparently believed the policy covered him for up to $150,000 a year in hospital care.  But when he needed a series of heart surgeries, he learned that the coverage was actually capped at $10,000, leaving him with more than $200,000 in medical bills and a bankruptcy filing.

The article suggests many people who buy these policies don’t understand that what they’re buying isn’t comprehensive medical coverage.

To see how likely that is, I shopped around on the internet for a limited benefit policy.  Many of the programs I found were confusing.  They are often promoted right next to more comprehensive plans, and only on a close inspection can you recognize the restrictions.

One program, marketed by a major national insurer, was typical.  After a $2,000 deductible, it pays 50% of a defined set of medical expenses, and boasts a $3 million “lifetime maximum.”  It sounds pretty good.  But right under the $3 million maximum it says there is also a “$25,000 annual maximum.”  Which is to say you could reach the $3 million limit, but would have to live 120 years to do it.

I suspect the Times was trying to say that these plans are bad.

In fact, it sounds like something the government should look into.

But wait, isn’t insurance already one of the most heavily regulated industries in the country?

If these plans are an example of what the celebrated Wendell Potter calls the “deceptive marketing practices” of the insurance industry, why do so many government regulators allow them to be sold?

Will a government-financed insurance company sell plans like these, too?

In fact, what kinds of plans would a government plan sell?  And how can we be so sure consumers won’t get confused by its plans, too?