“What we’re also discovering is that insurance is complicated to buy.” —Barack Obama
By Lambert Strether of Corrente.
ObamaCare defenders consistently point to the abolition of lifetime or annual caps on dollar costs as one of the main benefits of ObamaCare. (Never mind that the administration delayed complete implementation of limits on out-of-pocket costs until 2015.) However, via Michael Olenick, from ObamaCare Facts (“dispelling the myths”) we read this:
While you may have to meet a certain amount of out-of-pocket expenses (deductible) before essential benefits are covered, the Affordable Care Act prohibits health plans (grandfathered and non-grandfathered) from imposing annual and lifetime dollar limits on essential benefits.
So far so good. Now get this:
Health plans can still however set limits on the number of times you can receive a certain treatment.
Hmm. How can this be? Let’s go to the text of the statute:
- Subpart II–Improving Coverage
- SEC. 2711. NO LIFETIME OR ANNUAL LIMITS.
- (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.
That’s the dollar cap. Here’s what sure looks like a loophole to me:
- (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 to the extent that such limits are otherwise permitted under Federal or State law.
OK, what are these “essential health benefits”? As it turns out, depending on your situation, they may not be all that essential. From the Glossary at healthcare.gov:
Essential health benefits must include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
Leaving aside that hospitals can and will game the billing codes on such services, how would per beneficiary limits work out in practice? Here’s what RomneyCare does, faced with a similar situation:
Although the commonwealth’s health care reform was robust enough to require health plans to provide certain services to residents, it did not eliminate all annual or lifetime benefit limits. Specifically, the law prohibits health plans from imposing an overall annual maximum benefit limit or annual maximum benefit limit for covered core services [the equivalent for ObamaCare’s “essential services”]. But group plans, including fully-insured employer sponsored health plans, may be permitted to offer Massachusetts residents health benefit plans that contain lifetime or annual benefit limits on non-core services.
Examples of limitations that are allowed include, but are not limited to, the following: (1) benefit limits on substance abuse treatment to the extent consistent with federal law; (2) benefit limits on physical therapy; (3) benefit limits on inpatient rehabilitation care services; (4) benefit limits on durable medical equipment. Notably, effective Jan. 1, 2011, annual benefit limits are banned for prescription drugs.
For ObamaCare, here’s UnitedHealthCare interprets the law and the rules, in its “Annual Limits” section:
Are plans allowed to have annual visit or day limits?
The Department of Labor (DOL) has informally commented [!!] that . For example, a frequency limit of 10 visits alone may be acceptable, but if the plan also places a cap on reimbursement, such as $50 per visit, the net result would be a $500 annual limit. In such cases, the DOL suggested that tying the payment to reasonable and customary expenses, or similar action, may rectify the annual limit issue.
Can plans replace dollar limits with visit or other limits in high risk cases?
The question of whether plans will be allowed to have annual visit or day limits are not directly addressed by the law or the interim final rules. The DOL has informally commented that frequency limits are generally acceptable. Such limits, however, should not “transcend” into dollar limits. For example, a frequency limit of 10 visits alone may be acceptable, but if the plan also places a cap on reimbursement, such as $50 per visit, the net result would be a $500 annual limit. In such cases, the DOL suggested that tying the payment to reasonable and customary expenses, or similar action, may rectify the annual limit issue.
So, if I understand “transcend” in this context correctly, a frequency limit can be placed for types of non-“essential” but covered items and services whose dollar costs are not given in the policy, or not well understood.
But it seems to me that such items and services are exactly the kind of care that one would wish to insure against most, because they are potentially the costliest and riskiest. If you need to rehab your hip, and that’s going to take 20 visits, but the policy under Section 2711(b) only covers 10, then you get to choose between being a cripple and a really big stack of bills. If you need chemo, and that’s going to take 26 treatments, but your policy only covers 13, then you get to choose between the Big C and selling your house.* And so forth. (Note that your hip and becoming cancer-free are essential to you, but that doesn’t mean they’re essential under ObamaCare.)
As usual with ObamaCare, we have very little data, and since there have (presumably) not been all that many claims filed under Obama, we don’t have much information on how Section 2711 has been
gamed applied in practice. So readers, here I’m handicapped by my horrified unfamiliarity with actual insurance policies. Does this interpretation seem plausible? Frankly, it would be nice to rule it out. What does your policy say, if you have one?
NOTE * “Prescription drugs” are in the “essential” category. I don’t read that as saying “all prescription drugs” and certainly not all medical drugs, like experimental treatments. No doubt in practice this will boil down to narrow formularies, exactly like narrow networks.