The Affordable Care Act creates an incentive for health insurers to look for subtle ways to discourage the sickest patients from joining a health insurer’s plan. If they are, they should cease and desist that hypocrisy immediately. They forfeited any right to deny coverage, both legally and ethically, when they openly embraced Obamacare’s guaranteed issue provision.
In a normal insurance market, insurers are able to reject applicants where the risk of an insurable event is no longer possible, but has actually occurred.
Example: “Hey, Joe, you know that homeowners policy you tried to sell me last week and I refused? Well, my house is on fire; please send me the application immediately.” You can see how a law requiring property insurers to accept an application from someone with a burning house might distort the insurance market.
But that’s exactly what the Affordable Care Act does, destroying any notion that health insurance is a normal insurance market. The ACA’s guaranteed issue provision requires health insurers to accept any applicant, and they are prohibited from charging the insured more for a preexisting medical condition, regardless of how much it costs.
A number of health policy experts have explained that guaranteed issue creates an economic incentive for health insurers to look for subtle ways to discriminate against the sick in the hope that the applicant would choose a different insurer.
Now more than 300 patient groups have written to the Department of Health and Human Services claiming that’s exactly what’s happening. The groups say that health insurers are charging some extraordinarily high copays for some of the more expensive prescription drugs.
Plus, insurers’ adoption of “narrow networks” that exclude many patients’ preferred medical providers can also encourage sick patients to choose a different health insurer.
Obamacare tries to mitigate health insurers’ financial losses—and their economic incentive to discriminate—by creating three separate ways to cross-subsidize insurers that are losing money on sick patients. But the jury’s still out on how well that’s going to work.
So the health insurers may be trying to find subtle ways, such as high prescription drug copays, to limit the number of sick people in the pool, which the ACA does not allow them to do.
When the health insurers issued a press release early in the health care reform debate announcing they would embrace guaranteed issue, they abandoned sound actuarial principles and forfeited any right to complain. If they have very expensive patients in their pool, insurers should pay those medical bills and quit looking for ways to discourage patients from joining their plan.
August 26, 2014