No Lifetime Or Annual Limits, Except...

Subpart II of the Senate’s version of health reform, the Patient Protection and Affordable Care Act (H.R. 3590) is titled “Improving Coverage.” It includes ‘‘SEC. 2711. NO LIFETIME OR ANNUAL LIMITS” and reads as follows:

a) IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish—
(1) lifetime limits on the dollar value of benefits for any participant or beneficiary; or
(2) unreasonable annual limits (within the meaning of section 223 of the Internal Revenue
Code of 1986) on the dollar value of benefits for any participant or beneficiary.

(b) PER BENEFICIARY LIMITS.—Subsection (a) shall not be construed to prevent a group health plan or health insurance coverage that is not required to provide essential health benefits under section 1302(b) of the Patient Protection and Affordable Care Act from placing annual or lifetime per beneficiary limits on specific covered benefits to the extent that such limits are otherwise permitted under Federal or State law.

Wait! What’s wrong with this picture? Doesn’t this Section 2711 say “NO lifetime of annual limits?” So then why does it go on to state in (a)(2) “unreasonable annual limits…on the value of benefits for any participant or beneficiary?” What does “unreasonable” mean anyway? This same paragraph cites “section 223 of the Internal Revenue Code,” that applies to high deductible health plans—does this mean that the annual limits could be the same as those that apply to high deductible health plans? According to a CCH tax analyst, this means that "A plan can put in place annual limits so long as they do not circumvent the deductible and out-of-pocket expenses limitations in Code Sec. 223."

And paragraph (b) says it does not prevent group health plan or insurance coverage to place “annual or lifetime per beneficiary limits on specific covered benefits.” The Senate giveth (or so it would appear) and the Senate taketh away. We’ve discussed this issue briefly in a recent post.

Americans seemed unaware of this coverage cap until a couple of days ago, when the American Cancer Society (ACS) and its Cancer Action Network (CAN), called the Senate out on this apparent discrepancy in coverage provisions and its potential adverse effect on people with cancer and other costly medical conditions.

Presumably, this annual cap provision was added to Sen. Harry Reid's manager's amendment at the behest of the Congressional Budget Office. The Senate leadership reportedly fears that prohibiting all limits could lead to higher costs and costlier insurance premiums. The House health reform legislation (H.R. 3962) ultimately prohibits lifetime AND annual coverage limits.

Furthermore, Consumers Reports claims in its December 14 Health blog that the Senate bill’s reference to “dollar value” in paragraph (2) in this section would let insurers limit certain types of care, such as physical rehabilitation sessions or mental-health counseling

Washington Post blogger Ezra Klein wrote on Friday, December 11: “The tradeoff here is slightly higher premiums for everyone versus total financial ruin for the people who absolutely need help the most,” Mr. Klein wrote. “Politically, choosing "everyone" rather than "people with cancer" makes sense, because the first group has more votes than the second. But on a policy level, it's nuts. Health-care insurance literally exists to protect us from the worst-case scenarios. This provision says that the Senate bill will protect everyone but the truly worst-case scenarios. If you assume that people support the basic concept of health-care insurance, then they don't, or shouldn't, support this.”

"If you can have annual limits, saying there's no lifetime limits becomes meaningless," Stephen Finan, ACS associate director of policy, is quoted as saying.
The Associated Press in a story released on December 11 reported that on the same day the White House agreed to “help close” the annual limit “loophole.”

"The president has made it clear that health insurance reform legislation should prevent insurance companies from placing annual limits on health expenditures that can force families into financial ruin," according to a White House spokesman. "We will continue to work with Congress on this policy."

White House health reform director Nancy Ann DeParle in a phone call on December 11 told ACS officials that she would "work to change the Senate language. The idea would be to first narrow the range of limits that could be imposed, and then gradually phase them out altogether over several years."

Meanwhile, the Senate continues to whittle away at health insurance reform, until…