Insurers no longer can reject customers with expensive medical conditions thanks to the health care overhaul, but there’s still wiggle room for them to discourage the sickest and costliest patients from enrolling.
Insurance companies can exclude some well-known cancer hospitals or certain individual specialists who treat pricey conditions from the list of providers they cover under a plan. They can dissuade HIV patients from signing up for coverage by requiring heavy initial payments of the bill for their prescriptions. They also might simply wait for competitors to jump into a market first and take all the risky patients who were hungry for coverage.
Consumer advocates and industry insiders warn that insurers are using tactics like these to limit their coverage of the sick, which can make it difficult for the people who need insurance the most to find the right plan. Narrow provider networks, in particular, have become more common, especially in coverage sold on new public health insurance exchanges created by the overhaul.
“It’s the same insurance companies that are up to the same strategies: Take in as much premium as possible and pay out as little as possible,” said Jerry Flanagan, an attorney with the advocacy group Consumer Watchdog.
Insurers acknowledge that people may see changes in coverage, driven in part by how the overhaul affects insurance. But they say prudent business practices, not discrimination against the sick, are the key factors behind the trends that have raised concerns. They also point out that if customers find a plan they don’t like, they generally have plenty of additional options to choose from both on and off the exchanges.
They also note that the overhaul takes several steps to discourage them from avoiding costly patients. The law prevents them from marketing or designing a plan that would discourage someone from applying based on their health. It also calls for insurers to chip into a pool that compensates competitors who wind up with a more expensive patient population. That lowers their incentive for discouraging the sick from enrolling.
“Health plans now guarantee coverage for individuals and families regardless of health status,” said Clare Krusing, a spokeswoman for the trade association America’s Health Insurance Plans, or AHIP.
There are three major ways insurers might still steer sick or expensive patients away from their coverage:
Form narrow networks
Insurers can lower their chances for covering patients with expensive medical conditions like cancer and autism simply by limiting the number of doctors and hospitals in a coverage network. That would send those patients searching for coverage elsewhere because they don’t want to pay expensive, out-of-network rates.
Narrow insurer networks might include only 30 percent or less of a market’s hospitals, as opposed to 70 percent or more for a broader network, according to the consulting firm McKinsey & Co.
Aside from excluding patients, narrow networks also can help insurers form a healthy customer base by lowering the cost of coverage. A narrow provider network gives insurers leverage to squeeze better rates out of doctors who want to be included in that network in order to get the insurer’s business.
Better rates lead to lower premiums, and young and healthy people generally shop for insurance based on price.
Cause prescription sticker shock
Some plans require patients to initially pay 30 percent or more of the bill for drugs that can cost several thousand dollars a month. HIV drugs and multiple sclerosis medications are among them.
The overhaul caps the annual amounts patients are required to pay for these so-called out-of-pocket expenses. Still, some say the higher cost-sharing requirements can steer patients that need these medications away from enrolling.
The AIDS Institute filed a complaint with the U.S. Health and Human Services Department earlier this summer against four Florida insurance companies over the issue.
Insurers say their plans follow HHS guidelines and cover all medically necessary HIV drugs. They also note that the price patients pay reflects, to some degree, what drugmakers charge for their medications.
Enter markets cautiously
Another way insurers might land a healthier population is by playing the waiting game.
The nation’s largest health insurer, UnitedHealth Group Inc., will dive into the overhaul’s public insurance exchanges with plans to sell 2015 individual coverage in 24 exchanges. That’s up from only four this year.
These exchanges debuted last fall and offer shoppers a chance to compare and buy policies, often with help from an income-based tax credit.
UnitedHealth’s delayed growth could be a savvy way to avoid some of the sickest patients who likely rushed to sign up for insurance in the initial year of the exchanges, said Bob Laszewski, a former insurance executive turned industry consultant.
That could free UnitedHealth to enter markets and sign up healthier patients after other insurers, most likely nonprofits with deep community roots, have “taken the bullet” the first year, he said.