AP/Detroit News Examines Lifetime Health Coverage Caps as Cost of Health Care Rises

U.S. residents increasingly "are learning that individual caps that seemed large quickly max out" because of the rising costs of health care, the AP/Detroit News reports. As a result, several patient advocacy groups are encouraging insurers to increase the limits, which do not adjust for inflation. In addition, lawmakers are currently considering two bills that would mandate such adjustments, according to the AP/News.

According to a survey by the Kaiser Family Foundation and Health Research and Educational Trust, 1% of U.S. employer-based single coverage health plans in 2007 set limits on benefits below $1 million. The study also found 22% of single coverage plans set caps from $1 million to less than $2 million.

The cost for work-sponsored health plans is expected to increase 9.9% this year and 9.6% in 2009, according to data from the PricewaterhouseCoopers Health Research Institute, the AP/News reports. Mike Thompson, a health care and employee benefits expert at the institute, said, "The nature of caps is that over time it becomes easier and easier to hit (them) because the costs of health care services keeps going up."

Jerry Flanagan, health care policy director for Consumer Watchdog, said health insurance hides the actual costs of health care, noting that most consumers are unaware how quickly $1 million "can evaporate" unless they have had to deal with a serious illness. Flanagan said, "You can eat through a million-dollar lifetime cap in two or three surgeries."

Rep. Anna Eshoo (D-Calif.), who in 1996 unsuccessfully proposed legislation regarding lifetime caps, intends to reintroduce the bill this summer, while Sen. Byron Dorgan (D-N.D.) in March introduced a similar bill in the Senate, the AP/News reports.

Health insurance industry officials say that federal laws requiring higher coverage caps would increase the cost of coverage and that lower caps offer consumers a wider variety of coverage benefits. Robert Zirkelbach of America's Health Insurance Plans said, "I think the discussion needs to move into why do some health care services cost hundreds of thousands of dollars and what can we do to address those issues" (Murphy, AP/Detroit News, 7/14).