A loophole could jack up your out-of-pocket costs.
The Washington Post / Getty Images
You probably know by now that the Senate healthcare bill would make 22 million more people uninsured, massively cut Medicaid, and give less financial help to people who buy insurance on their own—all to pay for giant tax cuts for the rich. And you may have heard that this reduction in health coverage could lead to an estimated 208,500 unnecessary deaths over the next 9 years. But what you might not know is that the Senate bill also unravels major protections for people who get insurance through their jobs.
The Affordable Care Act (ACA) mostly left employer insurance plans alone and focused on improving access to coverage through the individual market and Medicaid. But everyone with insurance gained significant protections from the ACA, including the ban on lifetime and annual limits on coverage.
Lifetime and annual limits were dollar limits on the amount of healthcare that your insurance plan would cover. Once people hit those limits, they'd have to pay for treatment out of pocket, even for benefits that were supposed to be covered by their plan. Before the ACA, these limits were far from uncommon: In fact, 59 percent of workers with employer coverage had a lifetime limit in 2009.
Most people didn't incur enough costs to hit these limits. But for those who did, like cancer patients who needed multiple rounds of expensive treatment or parents of kids with severe birth defects, it could be devastating. Sarah Kliff from Vox wrote about Timmy Morrison, a 6-year-old boy who racked up more than $1 million in treatment costs in the first six months of his life. Luckily, Timmy was born six days after the ACA's ban on lifetime limits went into effect; otherwise, he would have hit the $1 million lifetime limit on his family's insurance plan before his first birthday.
So how does the Senate bill bring back lifetime and annual limits? It's a little-known side effect of the bill's provision to let states waive the ACA's standards for essential health benefits (EHBs), which require plans in the individual and small group markets to cover a comprehensive set of medical services. Before the ACA, many of these plans didn't offer benefits like maternity care, mental healthcare, or prescription drugs, all of which are now required.
EHBs don't apply to large employer plans, but the way the ban on lifetime and annual limits works is that insurers are forbidden from imposing limits on essential health benefits specifically. This isn't much of a concern under the ACA because, in every state, EHBs cover a robust set of services and treatments. But under the Senate bill, states could require a much narrower range of benefits—meaning that even basic services like prescription drugs and maternity care could end up being subject to caps if states no longer required them.
The Senate bill also makes these waivers incredibly easy to get. Governors can request them without the approval of their state legislatures, and the bill basically directs the federal government to approve them automatically unless it would increase the deficit. The Congressional Budget Office projected on Monday that about half of the US population would live in states that would change required benefits with these waivers.
It's terribly unfair that under the Senate bill, people buying insurance in different ZIP codes wouldn't be entitled to the same consumer protections and benefits. But the problem goes even deeper than that: Under the Senate bill, your risk of being subject to lifetime or annual limits won't just depend on where you live. That's because employer plans actually get to pick which state's EHB standards they want to follow for the purposes of determining which benefits are protected from lifetime or annual limits. So if even a single state reduces its EHB standards to a bare-bones level, then workers across the country could be affected.
This isn't just a theoretical concern: A recent survey found that 20 percent and 15 percent of large employers would bring back annual limits or lifetime limits, respectively. Based on this, my colleagues at the Center for American Progress estimated that nearly 27 million people with employer plans could see the return of annual limits on their coverage, while 20 million could face lifetime limits.
We didn't need any more proof that the Senate bill isn't designed to improve healthcare for working people—but they gave it to us anyway. It's increasingly clear that this "wealthcare" bill is only intended to benefit one group: the 367,000 millionaires who would get a big tax cut from it.
And if they pass this bill, the Senate majority will be paying for that tax cut by making health insurance worse for the rest of us.
Thomas Huelskoetter is a health policy analyst at the Center for American Progress.
- Affordable Care Act
- american health care act
- better care reconciliation act