By Jennifer Popik, JD, Robert Powell Center for Medical Ethics
Under the Obama Health Care law, the Administration’s stated mission is to limit not only the overall level of healthcare spending but also what Americans may choose to spend, out of their own funds, for their own families’ life-saving and health-preserving health care. This month, a controversial new ruling adds another tool–called “Reference Pricing”– to their toolbox of ways to limit American’s health care spending.
A May 16, 2014, article written by the AP’s Ricardo Alonso-Zaldivar– “Cost-Control Plan For Health Care Could Cost You”—explains how this will work.
You just might want to pay attention to the latest health insurance jargon. It could mean thousands of dollars out of your pocket.
The Obama administration has given the go-ahead for a new cost-control strategy called “reference pricing.” It lets insurers and employers put a dollar limit on what health plans pay for some expensive procedures, such as knee and hip replacements.
Some experts worry that patients could be surprised with big medical bills they must pay themselves, undercutting financial protections in the new health care law. That would happen if patients picked a more expensive hospital — even if it’s part of the insurer’s network.
The new strategy works like this:
Your health insurance plan slaps a dollar limit on what it will pay for certain procedures, for example, hospital charges associated with knee and hip replacement operations. That’s called the reference price.
Say the limit is $30,000. The plan offers you a choice of hospitals within its provider network. If you pick one that charges $40,000, you would owe $10,000 to the hospital plus your regular cost-sharing for the $30,000 that your plan covers.
The extra $10,000 is treated like an out-of-network expense, and it doesn’t count toward your plan’s annual limit on out-of-pocket costs.
That’s crucial because under the health care law, most plans have to pick up the entire cost of care after a patient hits the annual out-of-pocket limit, currently $6,350 for single coverage and $12,700 for a family plan. Before the May 2 administration ruling, it was unclear whether reference pricing violated this key financial protection for consumers.
This new reference pricing will affect most employer-based plans as well as those in the new insurance exchanges. The administration and other experts claim that reference pricing will help check rising premiums.
This is dangerous territory, as we have see other mechanisms the administration is using to “check premiums” lead to more restrictive networks, fewer specialists, and less access to life saving drugs. For more, see here: powellcenterformedicalethics.blogspot.com/
The first of the other mechanisms being used to control premiums is limits in the state “exchanges.”
The Obamacare state-based health insurance “exchanges” are promoted as marketplaces through which gradually more and more of us will annually select our health insurance plan for the next year. Under Obamacare, however, consumers may only choose plans offered by insurers who do not allow their customers to spend what government bureaucrats deem an “excessive or unjustified” amount for their health insurance.
As widely reported in the mainstream media, this means that health insurance plans offered in the exchanges typically have panels of available health care providers that exclude specialist doctors and healthcare centers with a reputation for successfully offering effective life-saving medical treatment.
Another major mechanism that will be used by the Obama Administration, beginning in 2018, to limit what we are allowed to spend to save our lives is the “excess benefits tax.” Obamacare will impose a 40% excise tax on employer-paid health insurance premiums above a governmentally imposed limit.
The “excess benefits” tax will have the intended result of effectively imposing a price control on health insurance premiums, meaning they will not keep up with medical inflation. Consequently, insurance companies will be forced to impose increasingly severe restraints on policy-holders’ access to medical diagnosis and treatment–limits that will not prevent setting broken legs and giving flu shots, but will make it harder and harder to get the often-expensive medicines, surgery, and therapy essential to combat such life-threatening illnesses as cancer, heart disease, and organ failure.
While Obamacare continues to roll out in 2014, it is important to educate friends and neighbors about the dangers the law poses in restricting what Americans can spend to save their own lives and the lives of their families.
For documentation and more details, see: www.nrlc.org/uploads/communications/healthcarereport2014.pdf