The headline was splashed across the top of the Drudge Report this morning: “Obamacare Cost Caps Delayed Until 2015.” The link went to a New York Times story about another Obamacare regulatory decision—in this case, a ruling that some employers have one more year before they must comply with one of the law’s key consumer protections.
The ruling itself isn't supposed to be such a surprise. The Administration signaled its intentions in February. But almost nobody (including me) noticed it until last night, when the Times posted a story by Robert Pear. Now some of the law’s critics are pouncing. They say it’s more proof that the law is a “train wreck” and that the administration is sticking it to consumers. “Once again the president is giving a break to big businesses struggling with his health care law while individuals and families unfairly remain stuck under its mandates,” House Speaker John Boehner said in a statement. “This report is just the latest evidence that the law is too costly and too complex to work – and that it’s not being implemented fairly.”
Everybody needs to breathe—and to put the story in its proper, rather different context.
The ruling is indeed frustrating and, for a change, it will actually make a difference to people who need insurance. Obamacare is supposed to place a hard limit on your out-of-pocket medical spending. If you have coverage through an employer—that is, a “group” plan—the limit is supposed to be $6,350 for an individual and twice that for a family. But the employers who provide group coverage frequently do so by breaking out spending into different categories—and, sometimes, hiring outside companies to manage the different parts. An employee in such a company would, technically speaking, have several different insurance plans—one each for medical, prescriptions, dental, and so on.
Employers told the administration that coordinating records from the different plans was difficult, so the administration gave them some leeway. Employers who already have such arrangements—and only employers who already have such arrangements—can have one extra year to put new accounting systems in place. During that time, the $6,350 limit will apply to “major medical”—doctor visits, hospitalizations, and so on—but not prescriptions, dental, or vision.
For people with chronic disease, that distinction matters. If you have cancer or multiple sclerosis or bipolar disease, you spend a ton on prescriptions, on top of all the other money you spend on doctors and hospitals. Depending on the severity of your condition, you could easily spend that $6,350 on medical bills and pay still (a lot) more for your drugs. Julie Appleby of Kaiser Health News has all the details if you want them.
Still, if you’re on a plan like that now, you face these expenses already. This decision means only that you’ll wait another year for relief—during which time, by the way, you’ll benefit from the law’s other protections. For one thing, you’ll be better off because the spending cap still applies to major medical expenses, a category that includes office visits and mental health care. That's not always the case today. You also don’t have to worry about lifetime caps, which the law eliminates and people with chronic disease occasionally exhaust. And that’s not to mention what happens if you end up buying insurance on your own: Thanks to the law, no insurer can deny you coverage, raise your premiums, or restrict your coverage because of your pre-existing condition.
(By the way, an administration official also confirmed that the delay applies only to group plans. The out-of-pocket limits on the new insurance exchanges will apply to all covered expenses.)
The American Cancer Society Action Network just released a statement, summing up what how many advocate feel:
The delayed enforcement of the single out-of-pocket limit is no doubt disappointing and a potential affordability barrier to treatment for some cancer patients and survivors in the coming year. However, it is important to not lose sight of important new protections that are taking effect as scheduled, including a ban on lifetime and annual dollar limits on coverage and a ban on pre-existing condition discrimination. These protections didn't exist before the health care law passed and will significantly improve access to adequate, meaningful health care for cancer patients and others with chronic diseases.
Whether the administration made the right decision in this particular episode is ultimately a judgment call, and not one I’m in a position to make. On the one hand, these sorts of complications are virtually inevitable, given the complexity of grafting a new health care system onto the existing one. The harder the administration leans on employers, the more it risks alienating employers who already provide insurance. Employers don’t want that and, by the way, neither do most employees who have employer insurance. In this sense, the delay might be a sign that implementation is proceeding as it should—with the administration introducing the new scheme cautiously, using its regulatory authority to make necessary adjustments along the way.
There's also a less generous interpretation. Disease advocacy groups had urged the administration not to push back the new regulation, citing the high expenses that people with chronic illness face. It’s a real problem. And they asked, reasonably, why the accounting was so difficult when some companies do it already. Progressives and their allies have long worried whether the Administration defers to business excessively, because of lobbying or fear of political reprisals, and not simply on matters like this. "You could argue that the the businesses have had plenty of damned time to put those systems in place since the law passed," Joan McCarter wrote at DailyKos.
Of course, Boehner and his allies are taking that argument even farther: Obama is standing with big business, they say, in order to screw the little guy. The implication seems to be that they—i.e, the Republicans—would do things differently. Each part of that argument is downright nutty.
Obama is the one limiting what charges insurers can pass along to consumers, in order to protect people with serious illness from financial ruin. He deferred a consumer protection by one year, yes, but he still wants it to take effect. Boehner and the rest of the law’s critics oppose such regulations. If they had their way, people with serious medical problems would face even higher bills and have less access to insurance. In other words, Obamacare critics aren't hyping this news because they wish consumer protections for the sick would take effect now. They're hyping the news because they wish consumer protections for the sick would go away forever.
The essential truth of Obamacare remains what it has always been: It's an imperfect law, being introduced under imperfect circumstances. But it's still going to make life better for millions of people—even if some of that helps takes an extra year to arrive.
Jonathan Cohn is a senior editor at the New Republic. Follow him on twitter @CitizenCohn
Note: This item has been updated