Lifetime caps on health insurance went away under the Affordable Care Act. Hundreds of thousands of people exhaled in relief, and I was one of them.
About 55 percent of people with employer-sponsored health insurance used to face lifetime caps on coverage, usually $1 million to $2 million. A lifetime limit was literally what it said: An insurance company would pay that much over time, then never pay another dime.
People with chronic illnesses were the main group affected. My daughter was a toddler when she was diagnosed with cystic fibrosis, a genetic disease. It’s expensive, including medications, hospital stays and often a lung transplant. Managed Care magazine estimates the lifetime cost of care at about $3.2 million – and that’s without the cost of treatment with one of the new biotech drugs that can cost $300,000 a year.
My family hadn’t come close to the lifetime cap by the time they were abolished, but every “explanation of benefits” showed the growing total, and I was worried.
Originally the number of people affected was relatively small – 20,000 to 25,000 people a year hit the limit. But that number was expected to grow. Hard as it may be to remember, or admit, health care costs were rising rapidly before the Affordable Care Act. Assuming the lifetime limit stayed the same and costs kept rising even minimally, the lifetime caps would affect about 300,000 people by 2019.
As it turns out, more people than expected have been racking up $1 million-plus bills since the Affordable Care Act abolished lifetime limits in 2014.
That’s partly because of an “all bets are off” mentality among health care providers and hospitals, says a report from an industry group for workplace benefits. But that’s also due to the cost of lifesaving medical devices and new drugs. At one big insurer, 71 percent of the claimants topping $1 million were children – mostly babies born with severe medical problems.
So instead of people with relatively rare conditions like hemophilia or cystic fibrosis, the lifetime limit, if it’s reintroduced, would include more people with major illnesses like heart failure, newborns with significant health problems and people who suffered accidents.
In other words, just about everyone would be at risk.
We should ask ourselves why that practice existed in the first place. After all, it’s a pretty bald statement of what a life is worth in an insurer’s eyes.
If it was to shield employers from unknown costs, stop-loss policies can help manage that risk. And booting people from private insurance only shifted the cost to taxpayers, as most people who hit the lifetime cap fell back on government programs like Medicaid.
Reining in health care costs would help the situation, as would pooling risk among a gigantic group – like, say, the nation.
The issue of lifetime limits is going to be on the table as Republicans in Congress move toward repealing the Affordable Care Act. If you subscribe to the belief that misfortune can hit anyone, then fight to keep the lifetime cap a relic of the past.
Addy Hatch is the managing editor of The Spokesman-Review.
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