A little-noticed provision in the Republican health care bill could allow insurers to reinstate lifetime limits in health insurance. This change would affect Americans in the individual market as well as the 159 million Americans who get health insurance at work, and it would be particularly dangerous to people or families with chronic conditions that require millions of dollars in medical treatment.
Before the Affordable Care Act, 91 million Americans were enrolled in health insurance plans that capped the amount of benefits a given enrollee could receive. Many of these caps were around $1 or $2 million, meaning that once a patient went over that amount, their benefits simply expired.
The American Health Care Act, which the House is set to vote on today, would give health insurance plans a way to once again set up lifetime and annual limits. This would be true not just for states that pursued the bill’s waiver, but for the entire country.
Matt Fiedler at the Brookings Institution noticed this loophole Tuesday, and the Wall Street Journal wrote about in a widely read article Thursday.
House Republicans disagree with this interpretation of their legislation. They argue that the "waiver does not apply to the large group market,” according to an aide with the Energy and Commerce Committee. “The MacArthur amendment explicitly allows states to seek a waiver for essential health benefits only for the individual and small group market, and it will have no effect on the large group (employer) market.”
Any ambiguity, the aide argues, could be resolved by Health and Human Services Sec. Tom Price in the future.
If the Brookings report is right, this could have a huge effect on sick patients who rack up some of the highest health care bills. PriceWaterhouseCoopers estimated that, before the Affordable Care Act, there were 20,000 to 25,000 Americans who had blown past their allotted medical benefits.
I wrote about one of those patients earlier this year, a 6-year-old boy named Timmy Morrison who was born extremely premature. He blew through $1 million in medical bills by time he was 6 months old.
His parents’ plan used to have a $1 million cap, but he was born six days after Obamacare banned lifetime limits, so it didn’t apply.
His parents are worried about what bringing back lifetime limits could mean for Timmy.
“We don’t really know what to do right now,” his mother, Michelle Morrison, told me in February. “Should we start pressuring his doctors to do a surgery now so he can get it in time? That doesn’t feel right. Insurance is supposed to cover things that you can’t anticipate — and for us, this is one of them.”
How the Republican bill could bring back lifetime limits
Here’s how it works. Right now, Obamacare says that employers cannot set lifetime limits on any medical care included in Obamacare’s essential health benefits package. They have to allow unlimited coverage of things like hospital visits, prescription drugs, maternity care, mental health services, and other benefits.
Each state got to choose a local health insurance plan that would serve as the benchmark for what exactly insurers have to cover, but there isn’t much variability. The Obama administration, in turn, gave large insurers the flexibility to choose whatever state benchmark they wanted. A plan in New York could use the Alabama benchmark or vice versa.
That regulation didn’t matter much because states were really constrained in what their benchmark plans looked like. “There is very minor variation,” Fiedler says.
But the Republican plan could change all that. Under an amendment introduced last week, states have the opportunity to waive out of Obamacare’s essential health benefits regulation. They could set up benchmark plans that cover fewer benefits, or have no benchmark at all.
All of a sudden, insurance plans in any state could just pick the most relaxed standard if they want to tighten up their own benefit package. If Alabama, for example, got a waiver, a health plan in New York could decide to use that as a benchmark.
“A single state’s decision to weaken or eliminate its essential health benefit standards could weaken or effectively eliminate the ACA’s guarantee of protection against catastrophic costs for people with coverage through large employer plans in every state,” Fiedler writes for Brookings.
Did Republicans want to allow lifetime limits? We don’t really know.
It’s not clear whether Republicans meant for this amendment to allow lifetime limits or not. There is reason to suspect they didn’t. House Speaker Paul Ryan, for example, has said he favors keeping Obamacare’s ban on lifetime limits.
But the Republican plan has come together very quickly, and legislators have had to digest its consequences on the fly. Many members of Congress didn’t seem to know that a recent amendment would exempt their own benefits from certain provisions of the bill.
This may just be an unintended consequence -- or not. It's what pops up when you rush a bill with no forethought. https://t.co/XE0NJimsDO
— Benjy Sarlin (@BenjySarlin) May 4, 2017
These type of consequences can be hard to spot. It took a full week for analysts to understand how AHCA could affect lifetime limits.
But these are the inevitable consequence of writing a complex bill that re-regulates America’s largest industry. Because the House is moving so quickly — planning to vote today without a Congressional Budget Office score — these side effects are only becoming clear at the last minute.
Ryan and other Republicans have said they don’t want a bill that brings back lifetime limits. The truth is, they are on the verge of voting for one.
