HR 6528, introduced by CA Representative Anna Eshoo, would increase the lifetime benefit maximums on group health insurance policies to $5 million in the first two years of coverage, $10 million in the third and fourth years, and would then index upward according to the consumer price index for subsequent years.
Undoubtedly this is one of those bills that it’s hard to be against. Higher lifetime maximums on health insurance policies provide a measure of relief to people with serious chronic health conditions. Here in Colorado, the Wilkes family would be able to focus on their little boy’s health rather than how to pay his medical bills. If the purpose of health insurance is to protect against catastrophic loss in the event of a health problem, it’s unconscionable to have situations where people run out of benefits. Not having coverage for the first few thousand dollars of a claim (in the case of a high deductible) is manageable. But not having coverage for the second million dollars of a claim is a bit tougher to get around.
America’s Health Insurance Plans (AHIP) opposes the bill because they say that it doesn’t address the real problem – rising health care costs. I agree that we need to get a handle on health care costs, since that’s what driving the health insurance premiums. Most health insurance companies are in business to make profits regardless of the cost of health care. So when health care costs increase, so do health insurance premiums – they’re not giving anything away for free. We absolutely need to put cost-control measures in place throughout the entire health insurance industry. But that’s not going to happen overnight. And unfortunately, people can hit their lifetime maximums overnight.
Lifetime benefit maximums generally don’t change as a policy ages. So a policy that was marketed in the 90s with a $1million maximum (which would probably have been fine 15 years ago) will still have that $1million benefit maximum, which is far from fine today. We’re seeing a lot of newly introduced Colorado health insurance policies with much higher lifetime maximums these days ($5 – $8 million as opposed to mostly $1 – $2 million several years ago). But older plans mostly still have the lower limits. For most people, they’re fine. But for those cases when a lifetime maximum is reached (and it’s not so rare anymore, as medical costs continue to climb), the consequences are shattering for the patient. Care might be discontinued, or the patient will go bankrupt – there aren’t a lot of other options.
While we try to sort out the hows and whys of runaway health care costs (and hopefully reign them in a bit), we need to make sure that health insurance is truly protecting the insureds. We can do this by eliminating the lifetime maximums on private health insurance policies, or by instituting a government-run reinsurance program to pick up the tab once it exceeds a certain amount. Higher deductibles on policies could help health insurance companies control the costs associated with lifting the lifetime benefit maximums. That way everyone would be paying a little more for health care in the form of a slightly higher deductible, but the trade off would be that people with truly catastrophic health problems would not have to worry about running out of coverage. One way or another, we can all afford to make payments on an extra $500 or $1000 to meet a higher deductible. But very few of us can come up with an extra few million dollars to pay medical bills. That’s why we have health insurance – but it doesn’t do us any good if we hit the lifetime maximum before the end of our lifetimes.