How Insurers Are Trying To Get Around Obamacare And Avoid Covering Sick Patients

CREDIT: AP Photo/Charles Dharapak

The second year of open enrollment for Obamacare plans is underway, most of the health law’s consumer protections are now in place, and the changes to the insurance market are so firmly entrenched that some Republican opponents have stopped advocating for a total repeal. Indeed, a growing number of GOP governors are acknowledging that the law is here to stay.

The Affordable Care Act may be the law of the land, but that doesn’t mean everyone is happy about complying with it. Insurance companies and businesses are still using several tactics to avoid extending adequate coverage to the Americans whom Obamacare is intended to protect. They’re using three main avenues to do so:

1. Offering skimpy plans to workers that don’t cover all their needs.

Under Obamacare’s insurance mandate, companies with more than 50 full-time employees need to provide them with insurance that meets the law’s standards. If they don’t, they’ll be subject to a fine. Nonetheless, the companies that have a long history of shifting health costs onto their workers haven’t been quick to change their approach; instead, they’re looking for ways to continue that trend even under the law.

As the Wall Street Journal reports, some companies are technically complying with the law’s coverage requirement by offering bare bones health plans that don’t include everything their workers may need. These “skinny” plans cover preventive care but exclude major benefits for costly services like a hospital stay, for example.

Under Obamacare, the private plans sold through the health law’s marketplaces must include hospital benefits, but employer-sponsored plans provided through large companies are not required to follow that rule — a quirk that’s controversial among insurance experts, some of whom contend that the law’s drafters didn’t intend to allow that loophole. Consumer advocates are wary of skinny plans, saying that the whole point of health reform is to ensure that workers can afford paying for expensive medical care out of pocket. According to the Wall Street Journal, however, an increasing number of companies are exploring this option for their workers.

2. Making drugs too expensive for sick patients to afford.

Under the health law, insurers are no longer allowed to deny coverage for people with pre-existing health conditions. But consumer advocates have repeatedly warned that insurance companies are indirectly getting around that by finding ways to avoid covering enough of those patients’ costly medications. This is a particularly big problem for Americans living with HIV and Hepatitis C, who are finding that plans across the country are requiring them to pay a lot of the upfront costs for their monthly prescriptions that can cost several thousand dollars each month.

That may be a calculated move on the part of insurers who don’t want to enroll sick patients. They may be hoping that if their plan makes HIV drugs too expensive, HIV positive people will have to go somewhere else for coverage. “We’re seeing policies in place by insurance companies that certainly look like they are intended to make plans look less attractive to patients with HIV,” John Peller, the vice president of policy at AIDS Foundation of Chicago, recently told the National Journal.

This isn’t a new issue; last December, Peller started warning federal health officials that his group was worried about insurers “putting discriminatory plan designs into place to try to deter certain people from enrolling.” But it continues to stoke controversy. Over the past several months, consumer protection groups have filed an increasing number of complaints with the Department of Health and Human Services to correct this issue. And a recent editorial published in the American Journal of Managed Care argued that some prominent insurers are taking it even further and putting generic drugs out of reach, too.

3. Forming narrow networks to discourage sick people from enrolling.

Along the same lines, insurers can may their plans look less attractive to sick patients by limiting the number of doctors in their network. That can prevent patients with chronic illnesses from being able to see the specialists they need. A recent Associated Press survey of cancer centers, for example, found that many of them are not covered in the majority of plans sold on the health insurance marketplaces.

Although Obamacare opponents often suggest that increasingly narrow networks are a direct result of the health reform law, this tactic has been around since the 1990s. Insurance companies say they’re not doing anything to target chronically ill people, pointing out that limiting their networks helps keep premiums down. Still, consumer advocates want the White House to send a strong message that discrimination against sick patients will not be tolerated under the law.

The Obama administration, which has issued stricter standards for insurers to try to crack down on overly narrow networks, says it will continue to monitor private insurance plans in 2015. “We are in the early stages of trying to figure out what the problems are, and to what extent they are based on insurance company discrimination, or inherent in the structure of the program,” Timothy Jost, a Washington & Lee University law professor and an expert in health policy, told the Associated Press in August.