Today’s report that the Senate health care bill includes a loophole which would place an annual cap on medical care for expensive illnesses like cancer violates President Obama’s core principles for health reform.

In the Obama plan released as part of his address to a joint session of Congress, the President clearly states that there would be limits on out-of-pocket spending:

Caps out-of pocket expenses so people don’t go broke when they get sick.

Of course, those principles also included a public option. But I don’t recall any Senator of the Lieberman-Lincoln-Nelson variety clamoring in public that insurance companies needed to be able to place limits on how much they would spend on a patient’s medical care.

The entire thing boils down to a question of the definition of the word “reasonable”:

As currently written, the Senate Democratic health care bill would permit insurance companies to place annual limits on the dollar value of medical care, as long as those limits are not “unreasonable.” The bill does not define what level of limits would be allowable, delegating that task to administration officials.

Adding to the puzzle, the new language was quietly tucked away in a clause in the bill still captioned “No lifetime or annual limits.”

This is another instance of Congress punting politically dicey questions to the executive branch, most likely the Secretary of Health and Human Services.

Why would this cap on treatments of cancer and other illnesses be instituted? The answer could lie in biologics. Under the current health care bills, drugmakers would be allowed to keep their exclusivity on expensive biologic drugs for at least twelve years and perhaps permanently, thanks to the evergreening clause. These are drugs that cost as much as $80,000 a year annually, and without the prospect of low-cost generic versions, that number will only increase. These drugs offer the hope of treatment for crippling diseases, but the cost is prohibitive to individuals. By preserving the drugmaker’s ability to charge that price, the insurance companies may not want to be stuck with the bill. So a cap on annual spending for the kinds of diseases these drugs treat would pass the costs on to the patient.

In her op-ed refuting claims that she is protecting the biotech industry’s profits, Anna Eshoo used the ban on annual caps as a selling point:

I’m exceedingly proud to have legislation I authored many years ago which prohibits lifetime health insurance caps included in the House health care reform bill. This cap affects many breast cancer victims, such as the woman mentioned in Jane Hamsher’s HuffPost column, “House Health Care Bill: A Death Sentence for My Fellow Breast Cancer Survivors,” effectively cutting off their insurance when they need it most. My legislation outlaws this practice.

That is no longer the case with the Senate bill, apparently.

Sen. Reid’s office has been contacted by FDL News to explain how the language on annual limits got into the Senate bill. We’re waiting for a response.

David Dayen

David Dayen