Thursday, January 26, 2017

If ACA is repealed, how many will max out on restored lifetime coverage caps?

In the waning days of his noble tenure as acting CMS director -- perhaps the last era in which CMS and HHS will function as fact-based agencies dedicated to improving healthcare delivery -- Andy Slavitt became a forceful Twitter advocate for the ACA, the payment reforms initiated under the ACA and MACRA, and other programs that require money, effort and commitment.

Among those tweets was one that listed 19 benefits that would be lost under ACA repeal, most of them little-known, including this:

That set me wondering: how many people would hit the coverage caps? And lo, an estimate exists. In our till-now-at-least-partially-fact-based-society, it sometimes seems that someone (or some interest group) has looked into almost any question that can be posed.

Start with how many people were subject to lifetime caps on coverage before the ACA eliminated them. In a followup tweet, Slavitt links to an HHS ASPE brief that, like virtually ever examination of employer-sponsored insurance, relies on the Kaiser Family Foundation's annual Employer Health Benefits Survey. In 2009, the survey found that 59% of people insured by employers were subject to lifetime coverage caps -- 43% with caps of 2 million or more, 16% with caps of $1-2 million, 1% with caps under $1 million (p. 195). That's 95 million people, the ASPE brief points out -- along with 10 million subject to caps in the individual market. (A recent Brookings report bt Loren Adler and Paul Ginsburg projects forward that 109 million would be subject to the caps today had the ACA not banned them.)

How many would hit their caps? For that, turn to very interested groups: those serving people with diseases and conditions that put them at risk of maxing out. In 2009, the National Hemophilia Foundation led a coalition a coalition of advocacy organizations devoted to an array of chronic diseases and disorders and commissioned PriceWaterhouseCoopers to analyze the impact of lifetime coverage caps and the costs of raising them.

PwC also relied on Kaiser data, in this case from 2007, to get at the number of people subject to caps. It then used claims data to estimate the number of people who hit the lifetime caps (there is no breakout of the data or methodology). The conclusion, as stated in the executive summary:
PwC estimates that in 2009 approximately 20,000 to 25,000 people are no longer covered by their employer-sponsored plans because of lifetime limits.
That suggests that about one out every 4,200 people subject to the caps hit them. It's unclear (to me) whether the projection is that 20-25,000 will hit the caps in 2009 or will have hit the caps -- that is (among other possible meanings), will still be working (or not working) with maxed-out insurance. By that reading, the (projected) total may have accumulated over more than one year.

A restatement in the text body makes rather odd use of verb tense but suggests that the total is for one year:
PwC estimates in 2009 that approximately 20,000 to 25,000 individuals reach their lifetime limits 
PwC further estimated that if caps were not raised, 300,000 would reach their lifetime limits in 2019. That presumed healthcare cost growth of 6% per year from 2009 to 2019, and growth has been slower -- probably thanks in part to the ACA. But if the ban on lifetime caps is repealed along with the ACA, and employers revert to caps in large numbers, it seems fair to assume that a good chunk of that projected total will max out. It's also likely, though, that if employers restore caps, they will do so at higher levels. PwC estimated the costs of raising caps to be very modest. A boost from $2 million to $5 million would have led to premium increases of $1.50/month for a single enrollee and $3.50 for a family enrollment.

What are the options for those who max out? PwC surveys four: 1) you lose income, spend down your assets and go on Medicaid; 2) you go on disability Medicare (with a two-year lag after going on Social Security disability), 3) you find other employment with insurance, or 4) you forego needed care. Along the human benefits, the absence of caps keeps people employed and saves the Treasury the cost of Medicaid and Medicare coverage.

What medical conditions most commonly result in maxing out on lifetime caps?  Metastasizing cancer (malignant neoplasm) tops a list based on data from Sun Life,  a "stop-loss" insurer -- that is, a reinsurer serving "self-funded" employer health plans, which cover the majority of those who get health insurance from their employers. The list of the top ten causes of "significant claim exposures" appears in slides from  a 2015 presentation by Stephen V. Murphy of Northshore International Insurance Services. These exposures accounted for 53% of Sun-Life's stop-loss reimbursements in 2015:

Top Ten - Sun Life 2015

Malignant Neoplasm - 17.6%

Leukemia, Lymphoma and Multiple Myeloma - 8.1%

Chronic/End Stage Renal Disease - 7.8%

Congenital Anomalies - 4.3%

Premature Births - 3.2%

Congestive Heart Failure - 2.6%

Cerebrovascular Disease (brain blood vessels) - 2.5%

Pulmonary Collapse/Respiratory Failure - 2.3%

Septicemia (infection) - 2.2%

It should be noted that stop loss claims can have a much lower dollar trigger than coverage caps; the percentages may be different for those who hit caps usually totalling $2 million or $1 million. Perhaps Slavitt had reason to spotlight premature births, a relatively common cause for healthy working adults to hit the cap.

As with many ACA benefits, the constituency of those directly affected by the banning of coverage caps is not huge, while the constituency of those potentially affected is enormous. Needless to say, those potentially affected don't feel the benefit. That's why providing effective health insurance is politically difficult -- at least in a society in which one of two dominant political parties does not accept the principle of risk pooled and shared on a societal basis.


  1. I'm literally a direct example of someone affected- hematological cancers being the second most common reason because I know that the course of treatment for a very large portion of them - Chemo, radiation then stem cell/bone marrow transplant ran close to $1M without counting expenses due to complications. I was on disability for the transplant and recovery, but if it had recurred before I qualified for Medicare (which if it were to recur would be very likely) I would have been completely screwed trying to pay for immunotherapy if the lifetime cap was there. At least it would probably have taken long enough for that basically 3rd line treatment that if I went back on disability right away I'd hopefully be on medicare in time to pay for the bone marrow transplant. What's crazy is that these are now among the most treatable cancers and many people, hopefully including me, can be completely cured so these are basically all one time expenses that perfectly meet what insurance products are supposed to protect you from. And it would be nuts for the insurance system to force me out of work not because the treatment would totally incapacitate me but because I'd need medicare to pick up the bill.

  2. Husband is year 3 remission for b-cell ALL. ACA's ban on lifetime caps saved us when he was being treated. But a 15% chance of relapse -- with nothing but a stem cell treatment to save him has me in a panic. Oh - and we have insurance through his employer! I can't believe the government would rather see us bankrupt than regulate the power the Insurance Companies have. Disgusting.

  3. A lot fewer people would even come near the lifetime caps if the government controlled the prices of specialty drugs. Another good control would be to reimburse hospitals on the Medicare fee schedule.
    According to a recent news story, if a patient on dialysis was covered by private insurance, the cost would be $100,000 higher than if they were covered by Medicare. Insurance companies are dopes!

  4. GOP positions/convictions on lifetime caps have always conflicted with some of their more sophisticated defenses of being merely in favor of universal risk-pooled catastrophic coverage, not more comprehensive/preventative models favored by Democrats. This point of yours is not brought up enough!