OBAMAmess Loophole: Insurance Plans Can Deny Hospital Stays

The Obama administration plans to close a loophole in the Affordable Care Act that allows large companies to refuse to cover in-patient hospital stays in any of their health insurance plans, according to an official involved in the internal discussions.

The official requested anonymity until the announcement is made because "the guidance that will be issued is not finalized."

Health plans for individuals and those working for smaller employers must include coverage within at least 10 categories of "essential health benefits" that include maternity care, prescription drugs and hospitalization.The health care law is much more stringent about what health insurance must cover for these people than it is for those working at large employers.

Washington and Lee University law professor Timothy Jost says the employer health insurance mandate is "not well-designed." It is a loophole, he says, that large companies "are not required to cover all of the essential health benefits." To pass the government "minimum value" test, these companies are required to cover only 60% of the value of some of the essential benefits, so they "don't have to necessarily offer every one," says Jost, a supporter of the law and an author of several health law books.

Plans that cap the number of hospital visits — or offer no hospital coverage at all — could probably pass the ACA's minimum value test if other coverage is generous enough, says Cori Uccello, senior health fellow with the American Academy of Actuaries.

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