Assembly Panel Clears Bill Capping Out-of-Pocket Insurance Costs

On Tuesday, the California Assembly Health Committee passed a measure (SB 639) that would cap out-of-pocket health insurance costs under the Affordable Care Act, after the Obama administration delayed such consumer protections for one year, the Sacramento Business Journal reports (Robertson, Sacramento Business Journal, 8/14).

Background

Under the ACA, out-of-pocket costs are capped at $6,350 for individuals and $12,700 for families. However in February, the Department of Labor released FAQ guidance permitting small group and non-grandfathered individual plans using multiple vendors to delay implementing a unified out-of-pocket cost limit by one year, or until 2015.

The government granted the year-long grace period in recognition of the complexities of such plans.

However, the exception potentially allows health plans with multiple vendors to charge patients the maximum out-of-pocket costs for each vendor. For example, an individual enrolled in any of those plans might have to pay a $6,350 bill for medical costs and another $6,350 bill for drug benefits.

In April, 107 consumer groups sent a letter to HHS and DOL warning them about the negative effects of the one-year delay. Meanwhile, more than 100 patient advocacy groups sent a separate letter arguing that the exception could "have an enormous negative impact" on patients, particularly those with chronic conditions (California Healthline, 8/8).

Details of SB 639

The bill -- by Sen. Ed Hernandez (D-West Covina) -- would limit consumers' out-of-pocket costs to the $6,350 limit called for by the ACA.

If passed this year, the cap would take effect in 2014, according to the Journal.

Comments

In a release, Anthony Wright -- executive director of Health Access -- said, "California has been implementing other pieces of the [ACA] early and should be in a place to go ahead on this."

He added that the bill would "improve upon" the federal law and ensure "that no California consumer in individual or small group coverage has to wait to get these important consumer protections."

However, Wright said the measure could be irrelevant because Covered California already has set benefits and out-of-pocket costs for exchange plans sold in 2014 (Sacramento Business Journal, 8/14).