Potential Costs and Challenges in Boston

With much of the country still reeling from the Boston marathon bombings, many of the victims – as well as their families and friends – have already begun the long road to recovery. With estimates that total medical costs could be as high as $9 million, there have been widespread reports of funds being established for individuals (here, here, and here, to name a few). And Governor Deval Patrick and Boston Mayor Thomas Menino established The One Fund Boston to help cover medical and other costs that raised more than $7 million in 24 hours, with contributions from the Boston Celtics, the Boston Red Sox, and Bain Capital, among others. (For ways to help, USA Today published this helpful guide.) With this outpouring of support from family, friends, and strangers, we’ve begun to consider some of the costs and challenges that the victims might face in obtaining the care they need to recover.

What kind of costs are we talking about? Given that Massachusetts has the highest insured rate in the country, many local victims are likely to have private or public coverage. For those that are covered, many will turn to this coverage for their medical expenses. However, even with private coverage in Massachusetts or another state, victims could face significant costs for their care. Although coverage may vary (and individuals should review their policies to understand the extent of their coverage), here are some of the potential costs worth considering:

Coverage Limits. Some plans have limits on the amount or type of coverage you can receive. Although the Affordable Care Act prohibited lifetime dollar limits on essential health benefits (such as ambulatory patient services, emergency services, hospitalization, prescription drugs, mental health, and rehabilitative services and devices), consumers might face costs because plans can 1) impose other restrictions, such as a limit on the number of visits for physical and occupational therapy; or 2) vary in the ways they define these categories so that a benefit that seems to fall within one category might not be clearly covered. Further, while the Affordable Care Act prohibited annual dollar limits on essential health benefits in 2010, some insurers received a waiver to maintain an annual dollar limit (currently, $2 million annually) until 2014. If a victim has this type of coverage, they could face high out-of-pocket costs depending on their medical condition.

In addition, some plans might not cover certain benefits at all, which places the burden on the consumer to pay for the service or benefit. Health insurance policies may, for example, exclude coverage for making changes to a victim’s home, such as installing a wheelchair ramp or safety grab bars. What’s more, health insurance policies may specifically exclude coverage for “acts of war” or “terrorism,” which – depending on how these terms are interpreted – raises the possibility that victims might not be covered. (In response to the attacks on September 11, 2001, the National Association of Insurance Commissioners (NAIC) considered whether it was appropriate to allow exclusionary language for acts of terrorism in health insurance policies (in addition to other lines of insurance) and adopted a policy statement concluding that “terrorism exclusions are not necessary for individual life and health products, and are generally not necessary to maintain a competitive market for group life and health products.” Many states, such as Kansas and North Carolina, issued subsequent guidance to insurers stating that they would disapprove exclusions for terrorism unless an insurer could show that it would face insolvency without the exclusion. It is unclear how many states currently prohibit exclusions for terrorism. For more on the coverage of terrorism-related events, see this GAO report and this NAIC resource list.)

Finally, those without comprehensive medical care – such as a limited benefit policy or drug discount plan – could find that they face significant out-of-pocket costs because their plan covers less than expected. Such policies are not regulated in the same way as comprehensive health insurance coverage and include far fewer protections to ensure that consumer needs are adequately met in the event of catastrophic need.

Cost-sharing Limits. Depending on the type of plan that a victim has, they may face out-of-pocket costs associated with their care. Most types of comprehensive health coverage include a deductible, an out-of-pocket maximum, and coinsurance requirements. If a consumer’s costs exceed the deductible and the out-of-pocket maximum for covered benefits and services, the insurer will typically pay for the remaining services. However, not all benefits or services may apply towards a deductible or out-of-pocket maximum; some plans might exclude mental health or prescription drug coverage from this amount, leaving the consumer to pay these additional costs. Other plans may place cost-sharing requirements on durable medical equipment, such as artificial limbs, that require the consumer to pay 20 percent of the cost of the equipment even after a deductible is met. Still others might be enrolled in high-deductible plans, which have become popular among employers in recent years, and require a consumer to pay out thousands of dollars before the insurer covers the costs.

Out-of-Network Care. Victims, particularly those from outside of Massachusetts, may face additional costs because they are receiving care outside of their typical provider network. If, for example, an individual lives in a different state and has coverage through an HMO or PPO, her insurer is likely to have a provider network based in her state that contracts with the insurer to provide services. But, outside of this established network of providers, most states allow consumers to be penalized – in the form of higher cost-sharing – by using an out-of-network provider, such as perhaps Brigham and Women’s Hospital in Boston. Even where state law requires an insurer to help cover the costs of coverage for out-of-network care, very few restrict the practice of balance billing (where a provider, such as a physician or hospital, seeks to collect from the patient any difference between the charges billed for a service and the amount that the insurer paid on that claim).

What could help? Given the outpouring of support for the victims, one would hope that at least their initial medical costs – such as hospitalization, prosthetic limbs, and out-of-pocket costs for other immediate needs – will be taken care of. Victims or their families should check with their insurer to understand what services are covered, how much the individual will face in out-of-pocket costs, and whether there are certain coverage exclusions. And, for the uninsured, hospitals might provide free or discounted services to those injured. Beyond these initial costs, however, there will be a critical need to ensure that the victim’s continuing needs – such as rehabilitative services and mental health treatment – are met.

One thing is certain – we will continue to reflect on the Boston Marathon bombing and what it means for our society to be faced with senseless violence perpetrated by others. As health policy professionals, we naturally turn to assessing our health care system’s ability to respond to the needs of the victims, including the level of public health preparedness and access to life-saving care and rehabilitative services. While we do not yet know all of the costs that the victims will face on the road to full recovery, it will be important to understand whether they have access to the services they need without significant financial hardship.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.