Insurance Companies To Remove Benefit Caps

On Sept. 23, insurance companies will no longer be allowed to place a lifetime limit on the benefits they pay out. For the vast majority of people with health insurance, the caps have been nothing to worry about. But lifting the limits is one of several changes taking place next week as a result of the new health care overhaul law.

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LINDA WERTHEIMER, host:

This is MORNING EDITION, from NPR News. I'm Linda Wertheimer.

STEVE INSKEEP, host:

And I'm Steve Inskeep. Good morning.

A new provision of the health insurance law takes effect this month. It will be a significant change for people who've suffered from long-term illnesses. The vast majority of insurance policies in America set a limit on the amount of insurance coverage you can receive, maybe a million dollars, maybe two. You might never know unless you needed more.

Now, the health insurance law eliminates that restriction. For some people, the change could be lifesaving. NPR's Julie Rovner reports.

JULIE ROVNER: Edward Burke of Palm Harbor, Florida, has had hemophilia so long that when he was a baby, there wasn't even an accurate medical test for it. His parents diagnosed him and his two brothers the old-fashioned way.

Mr. EDWARD BURKE: Once we started crawling and our knees black and blued, that was the test. So we - mom and dad figured by 1960, yeah, looks he has hemophilia there.

ROVNER: But as he got older, things changed a lot. In the early 1970s came the development of something called factor eight. It replaces the blood clotting factor that hemophiliacs are missing. Burke says it was nothing short of a miracle. Before, he says, the smallest bump or bruise would mean days on the sofa with an ace bandage and icepacks. But with the new factor, as they called it...

Mr. BURKE: All of a sudden, you could take this medicine and it didn't take four or five days. It was gone in 24 hours.

ROVNER: But like most medical miracles, this one came at a price.�

Mr. BURKE: It was easily about $900,000 a year for me to take factor prophylactically, as what we were told to do, to prevent bleeds from happening.

ROVNER: Which brought Burke face to face with something that affects relatively few people with health insurance: lifetime caps on benefits. Most policies have them. And most people who only have claims of a few hundred or a few thousand dollars a year never know they're there. But for hemophiliacs and others with chronic conditions that require hugely expensive drugs or treatments, capping out, as it's known, is just a fact of life.

Mr. BURKE: After two years, you'd have to leave the company you were with, or go on - if you had a spouse, go on theirs, because you capped out.

ROVNER: In other words, people actually have to quit their jobs in order to find new health insurance because they literally use up their benefits. And how many times has Burke capped out?

Mr. BURKE: It would be twice over the last seven years.

ROVNER: It would have been more, he says, but for the fact that the industry he works in, home health care, has been undergoing a series of mergers.

Mr. BURKE: The companies kept changing names and being acquired, so you started over again.

ROVNER: Meaning his benefits limit kept getting reset.

Mr. BURKE: Or I would have capped out four or five times.

ROVNER: But it's not just people with expensive illnesses like hemophilia who are affected by lifetime benefits limits.

Ms. KAREN POLLITZ (Department of Health and Human Services): Any of us are at risk.

ROVNER: Karen Pollitz is�the director of the Office of Consumer Support at the Department of Health and Human Services. That makes her one of the people in charge of implementing the new health law.

Ms. POLLITZ: I had a friend who had twin girls who were born prematurely, and before their first birthday, he had hit the lifetime limit on his coverage because of all of the health problems that they had.

ROVNER: That's another quirk of the lifetime limits problem. It generally covers an entire family, not just the affected patient or patients. And Pollitz says that being able to effectively use up your insurance kind of negates the idea of having insurance in the first place.

Ms. POLLITZ: It's like saying my health insurance is okay, but not if something really bad happens to me.

ROVNER: That's why starting with new insurance plans sold after September 23rd, or existing plans that renew after that date, insurers will no longer be able to impose lifetime limits. They won't be able to game the system by replacing them with annual benefits limits, either. Those are being phased out. They won't be allowed at all by the year 2014.

Edward Burke says it's a huge relief, not just for him, but for his wife and daughter, as well.

Mr. BURKE: The fact that they can't cap me out is a huge blessing, if you ask me.

ROVNER: That's probably true even for those who might never have known it was a possibility.�

Julie Rovner, NPR News, Washington.

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