Wednesday, August 14, 2013

Fwd: qotd: Complexity of catastrophic cap on losses causes delay in full implementation

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-------- Original Message --------
Subject: qotd: Complexity of catastrophic cap on losses causes delay in
full implementation
Date: Tue, 13 Aug 2013 10:04:30 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
August 12, 2013
A Limit on Consumer Costs Is Delayed in Health Care Law
By Robert Pear

In another setback for President Obama's health care initiative, the
administration has delayed until 2015 a significant consumer protection
in the law that limits 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 to set
higher limits, or no limit at all on some costs, in 2014.

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 Monday.

The health law, signed more than three years ago by Mr. Obama, clearly
established a single overall limit on out-of-pocket costs for each
individual or family. But federal officials said that many insurers and
employers needed more time to comply because they used 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.

United States Department of Labor
February 20, 2013
FAQs about Affordable Care Act Implementation Part XII

Q2: Who must comply with the annual limitation on out-of-pocket maximums
under PHS Act section 2707(b)?

The Departments have determined that, only for the first plan year
beginning on or after January 1, 2014, where a group health plan or
group health insurance issuer utilizes more than one service provider to
administer benefits that are subject to the annual limitation on
out-of-pocket maximums under section 2707(a) or 2707(b), the Departments
will consider the annual limitation on out-of-pocket maximums to be
satisfied if both of the following conditions are satisfied:

a. The plan complies with the requirements with respect to its major
medical coverage (excluding, for example, prescription drug coverage and
pediatric dental coverage); and

b. To the extent the plan or any health insurance coverage includes an
out-of-pocket maximum on coverage that does not consist solely of major
medical coverage (for example, if a separate out-of-pocket maximum
applies with respect to prescription drug coverage), such out-of-pocket
maximum does not exceed the dollar amounts set forth in section 1302(c)(1).

Comment: One of the most important benefits of Obamacare is the
establishment of maximum out-of-pocket spending that any individual or
family would have to face in any given year. Although the amounts will
still be unduly burdensome for far too many, nevertheless, it does
provide some protection against catastrophic loss.

For the first year, 2014, the administration is allowing maximums to
apply separately to both major medical coverage and prescription drug
coverage, so patients could face twice the maximum in out-of-pocket
spending. This transitional relaxation of the rules is to allow insurers
to coordinate their computers that currently administer medical benefits
and drug coverage separately.

We've discussed before the fact that losses in excess of the maximums
may still occur because of limitations in benefits covered or from
services provided outside of health plan networks. This one year
transition not only will add to that exposure, but it also provides yet
another example of the excessive administrative complexity of Obamacare.
Wasting resources on excessive administrative services while exposing
patients to potential financial hardship would be greatly diminished by
changing to a single payer national health program.

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