Even if health bill passes soon, wait for reforms could be long
Major provisions would take effect in 2014; enforcement in doubt

By David S. Hilzenrath
Washington Post Staff Writer
Monday, November 30, 2009

The White House has a message for Americans suffering under today's health insurance system: "Help is on the way."

But not as fast as you might think.

Measured against the promises President Obama and congressional Democrats have made about health-care reform, the bill the Senate begins debating this week could be setting Americans up for disappointment: Some of the main reforms would not take place for several years, and even when they do, some observers say, the bill does too little to make sure they would be enforced.

Until 2014, insurance companies could continue to deny coverage or charge higher premiums based on people's medical history. Another highly touted reform -- banning annual and lifetime limits on coverage -- would take effect in 2010, but it would permit significant exceptions.

Even with those rules in place, "there's no power to really hold the insurance companies accountable," said consumer advocate Betty Ahrens, executive director of the Iowa Citizen Action Network. "It's toothless."

Jim Manley, a spokesman for Senate Majority Leader Harry M. Reid (D-Nev.), said the bill was a compromise. "This is not the legislation we would have written in a perfect world, but Senator Reid believes that this bill has the best chance possible to get the 60 votes necessary to overcome a Republican filibuster," Manley said.

The delay in implementing some key reforms contrasts with the urgency of Obama's call for action.

Although some changes might take years to implement, Obama said in July, "We shouldn't have to wait a long time to make sure that people don't lose their insurance because of a preexisting condition."

Delaying relief until 2014 means that Obama could face reelection -- and Congress be transformed by two elections -- before voters begin feeling the legislation's full effect.

It would also reduce the cost of the bill during the 10-year budget window measured by the Congressional Budget Office.

Deferred until 2014 would be a federal mandate that everyone buy insurance, subsidies to help people with lower incomes pay for it, and the creation of marketplaces called exchanges, in which individuals and small businesses could comparison-shop for health plans.

The bill would offer interim relief for some people with preexisting conditions by creating a temporary insurance plan just for them, but only people who have been uninsured for six months could join.

White House health reform czar Nancy-Ann DeParle said the president was moving as quickly as possible. She said that the insurance industry cannot be forced to accept people irrespective of preexisting conditions until everyone is required to have insurance, and that the administration does not want such a requirement until the exchanges are up and running.

A close reading of the bill reveals other surprises, like the section titled "No lifetime or annual limits," which is intended to protect people from huge out-of-pocket expenses.

Where annual benefits are concerned, the Senate bill bans only "unreasonable" limits. What that means is not spelled out; a Senate aide said the Treasury Department would set the standard.

In addition, the bill says that certain health plans could continue to use annual and lifetime limits. As Timothy Stoltzfus Jost, a law professor at Washington and Lee University, interprets it, those potentially exempt from the ban include companies that self-insure, meaning they pay employee health benefits out of their own coffers, and businesses with more than 100 employees.

Further, the prohibition on lifetime and annual limits applies only to limits "on the dollar value of benefits."

In the past, health plans have gotten around restrictions measured in dollars. In 1996, Congress passed a law that said employers could not set lower dollar limits on mental health coverage than on medical and surgical coverage. Many employers responded by adopting tighter limits on the number of mental health outpatient visits or hospital days, according to testimony the Government Accountability Office gave in 2000. Congress finally closed that loophole in 2008.

In this bill, the Senate majority leader avoided an absolute ban on annual limits because that could drive up premiums, said a Reid aide who was not authorized to speak publicly on the matter. While a low annual dollar limit might be unreasonable, an annual limit of three attempts at in vitro fertilization might be reasonable, the aide said.

What's more, enforcement of the bill's new federal insurance rules would generally be the responsibility of state regulators. With some exceptions, the federal government would step in to police private insurers only if it determined a state was not doing the job.

"Unless an administration is in place in 2014 that is deeply committed to pushing recalcitrant states aside and taking direct action, it is likely that the reforms may never be implemented adequately throughout the country," Jost wrote in a recent blog post.

The government has used a similar "federal fallback" model to enforce other landmark health-care legislation, and a congressional committee found that insurance abuses festered.

At issue is the practice known as rescission, in which insurers revoke policies after policyholders become severely ill or injured. To avoid paying big medical bills, insurers search policyholders' original applications for grounds to cancel the policies, such as failure to disclose preexisting conditions.

A 1996 federal law called HIPAA, the Health Insurance Portability and Accountability Act, prohibited rescissions unless consumers defrauded the insurer or deliberately misrepresented their medical condition. But the federal agency responsible "has done nothing to enforce those rights or to ensure that states do so," Rep. Henry A. Waxman (D-Calif.) said in a hearing last year.

An official testifying for the agency, Abby L. Block, confirmed that it had taken no enforcement action. She said her hands were tied unless it appeared that a state was not "substantially enforcing" the federal requirements.

Despite the HIPAA standard, most states have allowed rescissions even if policyholders' misrepresentations were accidental, the staff of the House Energy and Commerce Committee reported this year.

Now, Congress is trying to do something about it again. The Senate bill reaffirms that insurers cannot rescind coverage unless the policyholder made a fraudulent or intentional misrepresentation.

If the bill is passed, that reform would take effect in 2010.

© 2009 The Washington Post Company