How Health Reform Would Restrict Annual And Lifetime Limits

As the Senate starts to debate health reform, Health Reform Talk begins a series comparing similar, but not identical features of the legislation already passed in the House (H.R. 3962) and the bill being considered in the Senate (H.R. 3590). These are features likely to survive in health reform legislation and which will directly affect employers. For today, provisions regarding annual and aggregate limits in group health plan are considered.

Both the House and the Senate legislation remove limits in annual and lifetime benefits from group health plans, but the two bills do so in different ways:

Senate (H.R. 3590): Sec. 1001 of the bill prohibits a group health plan and health insurers from establishing lifetime limits on the dollar value of benefits or “unreasonable annual limits.” However, the Senate bill does not prohibit self funded health care plans from placing annual or lifetime limits on “specific covered benefits” as long as those limits are not prohibited by law (for example, a limit on AIDS coverage likely would be prohibited by the Americans with Disabilities Act, and a separate limit on mental health coverage would be prohibited by the Mental Health Parity Act).

Sec. 1001 would take effect for plan years beginning on or after six months after the date of enactment.

House (H.R. 3962): Sec. 109 prohibits all group health plans and health insurers from imposing an aggregate dollar lifetime limit on benefits payable under a health plan. This provision would take effect on the date of enactment.

The House bill also prohibits health plans that are required to offer an essential benefits package from imposing any annual or lifetime limit on covered health care items and services. This provision would apply to all plans offered through the Insurance Exchange starting in 2013 (mostly small employer plans) and all employer plans starting in 2018.

Happy Thanksgiving

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Botax could increase cost of beauty

The cost of vanity could soon go up and plastic surgeons are probably not feeling too thankful about it this Thanksgiving. Tucked in the Senate’s latest version of health reform, released last week, is a provision that would slap a five-percent excise tax, dubbed by many as the “Botax,” on elective cosmetic surgeries and procedures, such as Botox, facelifts, breast implants, tummy tucks, teeth whitening, and the like. The tax would apply regardless of whether the procedure is covered by insurance or paid out of pocket.

However, the tax would not apply to surgeries and procedures that are done to fix deformities arising from or directly related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. I suspect that, in many cases, this would become a close call.

Under the proposal, the tax would be paid by person on whom the procedure is performed and would have to be collected and remitted by the doctor or facility performing the procedure. If the doctor or facility doesn’t collect the tax, they would be responsible for paying it.

Though it’s estimated that the new tax would bring in an estimated $5 billion to help pay for health reform, some find this doubtful. For instance, Dr. Patrick McMenamin, the president of the American Academy of Cosmetic Surgery, points to the experience of New Jersey, which is the only state to impose a cosmetic surgery tax, claiming that the state has generated 59 percent less than expected by its tax.

Not surprisingly, doctors see plenty of gray areas in determining which surgeries and procedures would be covered by the tax and which would not. For example, ABC News reports, doctors wonder “whether breast reconstruction after a mastectomy would count as cosmetic because a ‘disfiguring disease’ didn't misshape a woman's breasts, the treatment did.” Also unclear is whether the tax would be imposed on related fees, such as anesthesia.

As it currently stands in the Senate bill, the new tax would apply to procedures occurring on or after January 1, 2010.

Anti-botax websites are already springing up. Why am I not surprised?