What Trumpcare Means for No Annual Limits

The details surrounding the new Donald Trump health insurance program currently being called Trumpcare are few and far between. Right now, people have a list of things Donald Trump would like to do, but there doesn’t appear to be a consensus so far. For example, Trump campaigned on the notion that he would have Obamacare repealed as soon as he took office. But since he won the election, Trump has backed away from that promise because he may not have the votes in the Senate that he needs for a complete repeal – and the political backlash could haunt him for four years if he kicks 22 million people off of their health insurance.

Since he most likely can’t and won’t repeal the ACA in full, Trump will probably gut Obamacare and keep only the essential parts. The two biggest aspects of Obamacare that Trump has promised to keep are not allowing insurers to deny coverage to people with pre-existing conditions, and allowing parents to keep dependents on their health plan until those dependents turn 26. Most people agree with these aspects of Obamacare, but other features that could prove more challenging to Trumpcare, like the fact that the ACA voided annual policy limits.

Annual Limits on Health Care Coverage

The Affordable Care Act (ACA) made sure that no insurance company could put an annual cap on how much companies would spend on essential coverage. The only exceptions are the health plans that were developed and purchased prior to March 23, 2010 and are considered grandfathered in. If those plans have annual caps, then those caps remain in effect.

Wouldn’t that Raise Costs for the Insurance Companies?

Let’s take a hypothetical example of a person who has cancer and requires expensive chemotherapy treatments twice every month. By the end of the year, he might require $500,000 in medication alone. If he has to get expensive tests done or winds up having another surgery, then he could exceed his cap for the year and he would have to pay any additional costs out of his own pocket.

Under the ACA, that person would never have to worry about a cap because chemotherapy is considered an essential service. No matter how much in medical bills that cancer patient racks up for the year, the insurance company has to cover its portion under the plan.

That sounds bad for the insurance companies, but the reality is much different. Before the ACA, states set the limits for annual coverage on health insurance policies. But CBS News discovered that it would only cost the insurance industry an extra 0.8 percent to raise the annual cap from $1 million to $5 million.

The Obama administration argued that charging extra for either reinsurance that increased the annual cap or new policies that offered more coverage per year is not fair to the American public. From the data provided, offering unlimited annual caps creates a negligible cost increase for insurance companies. Since most people never come close to reaching their annual limits, it seemed logical to ACA lawmakers that annual limits were unnecessary.

What are Essential Services?

It’s important to remember that this unlimited spending limit per year only applies to essential services. Those services are:

  • Outpatient care
  • All emergency services
  • Hospitalization
  • Pregnancy services before and after birth occurs
  • Mental health treatment, including counseling for addiction
  • Prescription medication
  • Physical and mental rehabilitation services
  • Any and all laboratory services
  • Preventive care, like wellness exams
  • All pediatric services including vision and dental (vision and dental are not considered essential services for adults)

As long as your needs fit into the realm of essential services, then you are covered for the entire year. Note that this doesn’t mean that essential services cost nothing. Some, like preventive care or immunizations, are covered at zero co-pay, which means you won’t pay out of pocket for them. But other services do require co-pays or coinsurance. Each company handles essential services differently, so contact your carrier to learn more about your cost for specific procedures.

Trump and Annual Limits

The idea of annual limits on health insurance is so diminutive that not even Trump has addressed it directly. The closest that anyone has come to determining what Trumpcare would do with annual limits is the assertion that gutting Obamacare would mean removing the statute that makes annual limits illegal. That means that Trumpcare could, in the end, allow insurance companies to put annual limits back on their policies.

There’s a lot of uncertainty as Donald Trump prepares to assume the presidency in January. While Trump is going to be unable to repeal Obamacare in full, he will definitely alter it to fit his ideas, which may be just as destructive as scrapping the law altogether. Trump will keep some of the more popular and helpful elements of Obamacare, but the rest of those health reform laws could wind up disappearing for good.

If insurance companies are allowed to put annual limits on coverage, it could be a blow to people with serious health issues. To defend his decision, Donald Trump could point to the minimal impact annual limits have on the coverage offered to most Americans, and allow that Obamacare rule to simply vanish, undetected from the public eye.