Lifting the cap on coverage

Local bankruptcy attorney Eron Epstein said he’s somewhat desensitized after handling thousands of cases, but those involving people who are facing crushing medical debt still are “heart-wrenching.”

“It’s bad enough just to get sick,” he said. “The last thing I would want to be worrying about was money.”

More than 60 percent of bankruptcy filings are caused by medical debt, according to a Harvard Medical School study.

But health care reform provisions that start taking effect this year will help protect patients from being overwhelmed by medical expenses.

Starting in September, insurance companies no longer may impose lifetime caps on insurance coverage. In 2014, insurers also may not impose annual dollar limits on coverage.

The rules will apply to new plans and retroactively to existing plans, said Jerry Flanagan, health care policy director for California-based Consumer Watchdog.

Insurers cap coverage to keep monthly premiums cheaper and control costs. A $1 million or $2 million cap might seem enormous, but a few hospital surgeries or years of cancer treatments swiftly could max it out, health advocates say.

“Even a $5 million cap is pretty easy to meet — not for most folks, but if you have a bad accident or if ... you have an illness that requires ongoing treatment,” Mr. Flanagan said.

The American Cancer Society estimates that a year of treatment for someone with late-stage colorectal cancer could cost more than $300,000.

More employer-sponsored health plans are offering coverage with at least a $2 million lifetime limit, according to a 2009 survey by the Kaiser Family Foundation.

Forty-three percent of workers — up from 32 percent in 2007 — have plans with lifetime limits of $2 million or more. About 41 percent of insured workers are in plans with no lifetime limit, and 16 percent have limits between $1 million and $2 million, the survey said.

Less than 1 percent of plans have a lifetime limit of under $1 million.

IMPACT ON INSURERS

For fully insured group and individual plans, BlueCross BlueShield of Tennessee has a $5 million lifetime cap. Very few patients reach it, spokeswoman Mary Thompson said in an e-mail.

“The lifetime cap should not cause major operational or business concerns for BlueCross,” she said.

The insurer still is trying to nail down details on annual caps, which are restricted but not prohibited before 2014, she said. In the meantime, it’s not clear if those limits involve dollars spent or doctor visits in a year, she said.

BlueCross now has annual caps on some services, including durable medical equipment, prosthetics and physical, speech and occupational therapies, she said.

Roger Rollman, spokesman for United Healthcare, said lifetime limits vary by health plan but some are capped at $1 million.

“This is the time for the difficult work of translating new law into practical market-level execution,” he wrote in an e-mail.

John Sorrow, Mid-South Region president for Cigna Healthcare, said eliminating lifetime benefit caps likely will have less than a 0.5 percent impact on the company’s claims costs.

But the change could affect premium costs and choices, he said in an e-mail.

“The overall cost of coverage will be higher to reflect the increased claim risk. In addition, the prohibition on using annual maximums may result in some low-cost plans with limited benefits no longer being available,” he said.

Mr. Flanagan said relatively fewer people will be affected by ending caps than by a reform that stops insurers from denying coverage or upping premiums for people with pre-existing conditions.

Still, he called the reforms “remarkable in the way they signify the change in the system, the focus on preventing disease and keeping people insured rather than pushing the really ill onto public programs.”