As Expected, ObamaCare Motivates Insurers to Shun the Sickest People

A patient with HIV/AIDS can expect to pay over $1,000 out of pocket for medicines, if he buys a policy on the ObamaCare health insurance exchange in Florida.

woman-in-hospitalAffordable”? Surely not. This perceived injustice has caused legal activists to file a lawsuit against four insurers, which offer plans in the Florida exchange, alleging discrimination.

Readers of this blog know that we have long warned against this consequence of ObamaCare. Insurers are not allowed to charge premiums appropriate to applicants’ expected medical claims. This is somewhat mitigated by a limited open-enrolment period. However, if applicants have chronic diseases, that provision gives little protection to insurers. While there are three methods within ObamaCare that transfer money to insurers which over-enroll sick patients, they do not eliminate the incentives for insurers to design plans that are not attractive to very sick patients. This results in a death spiral of antiselection.

An ObamaCare Silver policy must pay 70 percent of expected medical costs, while covering 100 percent of “preventive care” (as defined by the federal government). However, the plan is designed for the average patient. So, it is easy for a health plan to design a plan that imposes very high medical maintenance costs on very sick, chronically ill people. High co-payments or co-insurance for prescriptions is one obvious method.

Our prediction: There will be many more such lawsuits.

Comments (13)

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  1. Matthew says:

    Affordable evidently has a flexible definition.

  2. Buddy says:

    This is what happens when the government decides to stick its hands in health care.

    • James M. says:

      Regardless of how much or how long it is preached, bureaucrats determining health care costs and needs is an inefficient policy. There are very little benefits, if any.

      • Thomas says:

        I would like to know the costs for patients with HIV/AIDS who have plans that are consumer driven, and they have real, expansive choices.

  3. Jay says:

    “ObamaCare insurers accused of overcharging for HIV/AIDS drugs”

    What else is new?

    “Insurers Accused of Discriminating Against People With HIV”

    Well then.. This should be a great example of how ObamaCare doesn’t provide quality care for the sick.

  4. Bill B. says:

    It shuns the sick people because they are the costliest group to insure. Regardless of being reimbursed through risk corridors, health insurance companies cannot take on a great deal of these patients and have fiscal success.

  5. Big Truck Joe says:

    Indeed- Obamacare has become quite a conundrum for the handsome young Indonesian actor, Barry Sortero, who plays the president of the United States on TV.

  6. Don Levit says:

    Here is what the article does not say:
    1. How much the total cost per month is the treatment?
    2. Is this discriminatory if AIDS is not an Essential Health Benefit? I don’t think so.
    Does the plan still pay the appropriate percentage of costs? – 60, 70, 80, or 90
    3. What do the Blues in Florida not cover as these 4 insurers do cover?
    4. Here is what the author of the blog did not say:
    the death spiral applies to AIDS claimants, which is not a death spiral for the entire pool.
    Don Levit

    • Don Levit says:

      Why is my comment at 4:23 pm yesterday still waiting moderation?
      Don Levit

    • John R. Graham says:

      To point no. 4: I still think there will be antiselection because no matter how much the insurance policy is designed to make the very sick people pay a lot out of pocket, it is still better for them than not having insurance.

      If such was not the case, there would not be this lawsuit, because the HIV/AIDS patients would not have bought the policies.

  7. Susan says:

    Since virtually every AIDS patient will hit the out of pocket limit of 6350 during the year, no matter how they set up the cost sharing, AIDS patients will pay 6350 a year. Therefore, I don’t think they can claim discrimination.

  8. John R. Graham says:

    One thousand dollars refers to the monthly cost, in case that is not clear in the post.