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Senate bill allows insurers to establish annual limits

"A loophole in the Senate health care bill would let insurers place annual dollar limits on medical care for people struggling with costly illnesses such as cancer," reports the AP. The Senate Finance Committee barred annual caps altogether. The merged Senate bill only erases "unreasonable" annual caps. What's "unreasonable?" Hard to say.

Hill sources explain that this was inserted because CBO said premiums would "go through the roof" if insurers couldn't cap benefits. The official quote from Jim Manley, Harry Reid's spokesperson, says much the same thing. "We are concerned that banning all annual limits, regardless of whether services are voluntary, could lead to higher premiums," he explained. "We continue to work with experts on how best to accomplish our goals of preventing insurance companies from imposing arbitrary coverage limits while providing the premium relief American families need and deserve.”

This, however, obscures the choice that's being made. The tradeoff here is slightly higher premiums for everyone versus total financial ruin for the people who absolutely need help the most. Politically, choosing "everyone" rather than "people with cancer" makes sense, because the first group has more votes than the second. But on a policy level, it's nuts. Health-care insurance literally exists to protect us from the worst-case scenarios. This provision says that the Senate bill will protect everyone but the truly worst-case scenarios. If you assume that people support the basic concept of health-care insurance, then they don't, or shouldn't, support this.

But the American people are much more likely to hear that premiums are going up than they are to get a detailed explanation of what they're getting in return for higher premiums, and so the Senate bill is watching its back. In a more sensible political system, however, the two parties would agree to institute a reinsurance program, as Reihan Salam has suggested. Chuck Grassley has broached reinsurance in the past, but he seems more interested in opposing this bill than improving it, so I don't see much chance of him resuscitating the idea.

By Ezra Klein  |  December 11, 2009; 1:56 PM ET
Categories:  Health Reform  
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Next: An argument I'm glad to disagree with


Shouldn't providers have to take some responsibility too, not to charge exhorbitant amounts to their sickest patients?

Posted by: roublen | December 11, 2009 2:06 PM | Report abuse

ah, hadn't seen your earlier post on providers.

Posted by: roublen | December 11, 2009 2:16 PM | Report abuse

No public option.
No medicare expansion.
And, uh, oh yeah, we can still cap your care.

Posted by: adamiani | December 11, 2009 2:29 PM | Report abuse

bait and switch, health insurance wise.

without Medicaire/single payer for all, it's more of the same.

and we need Congress? for what?

do away with Congress, the middle man for the Corporations that own America.

so i'm supposed to vote for Democrats that going to effectively screw me indirectly instead of Republicans who screw us directly?

lol, Choices American style.

Capitalism is such a joy!

enjoy the scamming of America, people.

Posted by: BernardEckholdt | December 11, 2009 2:31 PM | Report abuse

Earlier today you were singing the praises of working within a strict budget. If you want a global budget but not an individual one, you'll simply end up not paying for some basic, cheaper care because you've had to pay huge amounts for some people.

Posted by: ab13 | December 11, 2009 2:36 PM | Report abuse

Interesting take on why this loophole was created:

Posted by: jennie129 | December 11, 2009 2:49 PM | Report abuse

This provision would be nothing short of disgustingly terrible. Rank stupidity.

Posted by: donovong | December 11, 2009 2:51 PM | Report abuse

one way you might limit costs for the most expensive patients, is that`after a provider had exceeded a fairly high threshold level of payment for a single patient, they could only bill based on their marginal costs, not based on their average unit costs, ala Dean Baker's article:

Posted by: roublen | December 11, 2009 3:18 PM | Report abuse

At my last job, i was given the choice of plans: either the one that covered medical expenses from 500$ up to 5,000$ per year, or one that covered from 5k$ to half a million.

Posted by: yoyoy | December 11, 2009 3:53 PM | Report abuse

this is absolutely stupid. when the risk is spread around to everyone the cost of care from $1,000,000 to unlimited is a very small number. I'm hoping Reid is just too dumb to have realized its not in and now pressure from the left will force it back in. Its not as if it should cost dramatically more again depending on where the limit is.

Posted by: visionbrkr | December 11, 2009 4:23 PM | Report abuse

I do wonder what the tipping point of items like this are for you, Ezra. At what point does the bill become not worth it?

It's worthwhile to ask how this is coming along:

And other things that need to be changed. It's time to tally up all the bad policy in the bill, especially if it's going to be ping-ponged upon the House.

And also to say if there's any one of them that's a go/no-go for you.


Posted by: toshiaki | December 11, 2009 4:26 PM | Report abuse

Seems to me the Post had an article recently on someone who was calling the ambulance and making use of emergency rooms incredibly often. Eventually people figured out some of his problems, he's doing better and rarely using emergency services. I see a role for annual limits in cases such as these, mostly to give the system an incentive to dig into cases.

Posted by: bharshaw | December 11, 2009 4:51 PM | Report abuse

Well there goes the other shoe. Looks like we will be compelled to buy lousy health insurance products that don't actually translate into needed health care services.

I say eliminate the pay caps and let private insurance die as it should.

Posted by: bcbulger | December 11, 2009 7:42 PM | Report abuse

The Senate seems to be owned by the private health insurance companies. Maybe there should be annual limits on health insurance coverage for Senators and Representatives.

Posted by: Aprogressiveindependent | December 13, 2009 1:11 AM | Report abuse

No ban on caps?

Let's get this straight - I am now required to buy a product that doesn't offer the fundamental aspects that it is designed to address - to give me peace of mind regarding ongoing treatment and prevent catastrophic financial ruin in case I need it.

Well, isn't that special?

Posted by: vmpaul61 | December 13, 2009 9:23 PM | Report abuse

So we pay outrageous premiums our entire lives and when we really really need health care the insurance companies response is ... Well, OK we will give you life saving care (as long as it doesn't cost us to much).

Wow Thanks!

Posted by: cautious | December 14, 2009 5:39 AM | Report abuse

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