How Insurance Companies Still Discriminate Against the Sick

Obamacare was supposed to put an end to denying coverage based on pre-existing conditions. But a new study suggests insurers are finding ways to accomplish the same thing through drug pricing.

One of the most important things the Affordable Care Act was supposed to do was put an end to a practice called pre-existing condition exclusion. Before the law passed, health insurers could refuse to cover any medical services for a health condition a person already had when they joined that insurance plan, or they could prevent the person from joining the plan entirely. So, for example, if you had psoriasis, the company might say that you could be on their plan, but you'd have to pay for all your psoriasis medications out-of-pocket.

For many people with big, expensive health problems, like asthma or diabetes, this part of the law greatly brought down the cost of their treatment. However, a new study published in the New England Journal of Medicine suggests that some insurers are still finding ways to keep sick people off their plans, particularly when it comes to people with HIV.

For the study, Doug Jacobs and Benjamin D. Sommers of Harvard analyzed the co-pays for HIV drugs within 48  "Silver" (mid-range cost) health-insurance exchange plans in 12 states. The drugs they examined were nucleoside reverse-transcriptase inhibitors, or NRTIs, which are one of the most commonly prescribed HIV medications.

Annual Cost of HIV Treatments
Average annual cost of various HIV treatments on the "adverse tiering" plans (red), compared with the other plans in the sample (blue) (NEJM)

They found that in a quarter of the plans, insurers had listed the NRTIs in the highest co-pay tier, meaning that the customers would have to pay 30 percent of the cost or more. About half of these so-called "adverse tiering" plans also had a deductible specific to that drug. People enrolled in these plans would have to pay more than $3,000 more per year for their treatments, even if they used generics.

"If plans place all HIV drugs in the highest cost-sharing tier, enrollees with HIV will incur high costs regardless of which drugs they take," the authors write. "This effect suggests that the goal of this approach—which we call 'adverse tiering'—is not to influence enrollees’ drug utilization but rather to deter certain people from enrolling in the first place."

The authors point out that these adversely-tiered HIV patients will at some point realize they're overpaying and switch plans. However, that creates its own problem. Health insurance markets require a delicate balance to function. Just enough sick people and healthy people need to be enrolled in each plan for the insurer to be able to make a small—yet reliable—profit while still paying for everything they promised to cover.

Once all the HIV patients start clustering in the more generous plans, it may lead to a "race to the bottom in drug-plan design," the authors write. No insurer wants to be saddled with all the most-expensive customers, so they may all rejigger their drug co-pays to be similarly harsh.

"The [Affordable Care Act] has already made major inroads in designing a more equitable healthcare system for people with chronic conditions," Jacobs and Sommers conclude, "but the struggle is far from over."