Dollars & Sense

Limit on consumer costs is delayed in health care law

Updated: 2013-09-25T14:28:14Z

The New York Times

In another setback for President Barack Obama’s health care initiative, the administration has delayed until 2015 limits on how much people may have to spend on their own health care.

The limit on out-of-pocket costs, including deductibles and co-payments, was not supposed to exceed $6,350 for an individual and $12,700 for a family. But under a little-noticed ruling, federal officials have granted a one-year grace period to some insurers, allowing them in 2014 to set higher limits, or no limit at all on some costs.

The grace period has been outlined on the Labor Department’s website since February but was obscured in a maze of legal and bureaucratic language that went largely unnoticed. When asked in recent days about the language — which appeared as an answer to one of 137 “ frequently asked questions about Affordable Care Act implementation” — department officials confirmed the policy.

The discovery is likely to fuel continuing Republican efforts this fall to discredit the president’s health care law.

Under the policy, many group health plans will be able to maintain separate out-of-pocket limits for benefits in 2014. As a result, a consumer may be required to pay $6,350 for doctors’ services and hospital care and an additional $6,350 for prescription drugs under a plan administered by a pharmacy benefit manager.

Some consumers may have to pay even more, as some group health plans will not be required to impose any limit on a patient’s out-of-pocket costs for drugs next year. If a drug plan does not currently have a limit on out-of-pocket costs, it will not have to impose one for 2014, federal officials said.

The health law, signed more than three years ago by the president, clearly established a single overall limit on out-of-pocket costs for each person or family. But federal officials said that many insurers and employers need more time to comply because they use separate companies to help administer major medical coverage and drug benefits, with separate limits on out-of-pocket costs.

In many cases, the companies have separate computer systems that cannot communicate with one another.

Health plans are free to set out-of-pocket limits lower than the levels allowed by the administration. But many employers and health plans sought the grace period, saying they need time to upgrade their computer systems.

“Benefit managers using different computer systems often cannot keep track of all the out-of-pocket costs incurred by a particular individual,” said Kathryn Wilber, a lawyer at the American Benefits Council, which represents many Fortune 500 companies that provide coverage to employees.

Last month the White House announced a one-year delay in enforcement of another big provision of the law, which requires larger employers to offer health coverage to full-time employees. Valerie Jarrett, the president’s senior adviser, said that the delay of the employer mandate showed “we are listening” to businesses, which had complained about the complexity of federal reporting requirements.

Although the two delays are unrelated, together they underscore the difficulties the Obama administration is facing as it rolls out the health care law.

Advocates for people with chronic illnesses said they were dismayed by the policy decision on out-of-pocket costs.

“The government’s unexpected interpretation of the law will disproportionately harm people with complex chronic conditions and disabilities,” said Myrl Weinberg, the chief executive of the National Health Council, which speaks for more than 50 groups representing patients.

For people with serious illnesses such as cancer and multiple sclerosis, Weinberg said, out-of-pocket costs can total tens of thousands of dollars a year.

Despite the delay, consumers in 2014 will still have many new protections. They cannot be denied health insurance or charged higher premiums because of pre-existing conditions, and many will qualify for subsidies intended to lower their costs.

In promoting his health care plan in 2009, Obama cited the limit on out-of-pocket costs as one of its chief virtues.

“We will place a limit on how much you can be charged for out-of-pocket expenses, because in the United States of America, no one should go broke because they get sick,” Obama told a joint session of Congress in September 2009.

Advocates for patients said the promise of the law was being deferred.

“We have wonderful new drugs, the biologics, to treat rheumatoid arthritis, but they are extremely expensive,” said Patience H. White, a physician who is vice president of the Arthritis Foundation. “In the past, patients had to live in constant pain, often became disabled and had to leave their jobs. The new drugs can make a huge difference, and we were hoping that the cap on out-of-pocket costs would make them affordable. But now many patients will have to wait another year.”

The American Cancer Society shares the concern and noted that some new cancer drugs cost $100,000 a year or more.

“If a prescription drug plan does not currently have a limit, then it will not have to have one in 2014,” said Molly Daniels, deputy president of the lobbying arm of the American Cancer Society. “Patients who require expensive drugs could continue to have enormous financial exposure despite the clear intent of the law to limit a patient’s total out-of-pocket exposure.”

Theodore M. Thompson, a vice president of the National Multiple Sclerosis Society, said: “The promise of out-of-pocket limits was one of the main reasons we supported health care reform. So we are disappointed that some plans will be allowed to have multiple out-of-pocket limits in 2014.”

Federal officials said they were offering transition relief to certain health plans in 2014. But, they said, by 2015, health plans must comply with the law and must have an overall limit on out-of-pocket costs for medical, drug and other benefits combined.

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